James Edward Hubbard v. Rachel Marie Hubbard ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
JAMES EDWARD HUBBARD, UNPUBLISHED
June 19, 2018
Plaintiff-Appellee,
v No. 336614
Gogebic Circuit Court
RACHEL MARIE HUBBARD, LC No. 2016-000048-DO
Defendant-Appellant.
Before: METER, P.J., and GADOLA and TUKEL, JJ.
PER CURIAM.
Defendant appeals as of right the judgment of divorce entered by the trial court,
challenging the trial court’s order regarding spousal support, property division, and attorney fees.
We affirm.
I. FACTS
The parties married in 1988 in the state of Washington, when plaintiff was 18 years old
and defendant was 20 years old. At the time, plaintiff was a member of the United States Army
and was stationed in Texas. Defendant was in her first year of an associate’s degree program in
veterinary science in Washington, but moved to Texas before beginning her second year. While
in Texas, she attended school and planned to attend veterinary school. After plaintiff completed
his term of service, the couple moved back to Washington where he obtained his undergraduate
degree. Plaintiff then attended medical school at the University of Washington and completed
his residency in Tacoma, Washington. During this time, defendant earned an undergraduate
degree which was paid for by scholarship, and also worked as a veterinary technician to support
the parties. Plaintiff completed his residency, and the couple ultimately moved to the area of
Ironwood, Michigan in 2001, where plaintiff obtained a position at Aspirus Grand View
Hospital.
After moving to the Ironwood area, the couple purchased a 4,500 square foot home on 20
acres; the home included a sauna, five bathrooms, and a full gym. Initially, defendant did not
work outside the home. Defendant investigated the possibility of attending veterinary school but
decided against it because the nearest school was more than four hours away. In 2004, she
opened a shoe store, Superior Shoes, which she then expanded to Dallas, Texas, and
Bloomington, Indiana. In 2009, Superior Shoes obtained a $400,000 loan from Wells Fargo that
plaintiff cosigned. Facing continuing financial problems, Superior Shoes stopped paying on the
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Wells Fargo loan in 2012, as well as on a credit card on which both parties were liable. Superior
Shoes closed permanently in March 2014. Plaintiff testified that he spent nearly $500,000 to pay
the debts of the business.
Plaintiff testified that after Superior Shoes closed, defendant “shut down emotionally to
me” and focused on obtaining a Master’s in Business Administration (MBA). Defendant
testified that plaintiff had developed a chronic “night terrors” condition that caused him to
violently confront defendant while sleeping, cursing at her, throwing things at her, and kicking
her out of bed. Defendant testified that in the final year of the marriage, plaintiff began to swear
at her and threaten her while awake. She testified to an incident in September 2014 when
plaintiff “was yelling at me about the business going downhill, and he said you deserve to be hit
upside the head with a two by four.”
In 2014, defendant obtained a student loan and used the funds to complete her MBA. In
May 2015, she accepted a position with the Veterinary Cancer Group in Los Angeles. Plaintiff
testified that he believed that defendant was to spend two months in Los Angeles for orientation,
and then begin working from home with regular travel to Los Angeles. Plaintiff testified that in
June 2015, defendant suggested that they get divorced to protect their assets while she attempted
to discharge the debts of Superior Shoes in bankruptcy. Plaintiff testified that the couple had
discussed this strategy before with plans to immediately remarry, and he therefore paid $2,650 in
attorney fees to begin the divorce proceeding. Several weeks later, defendant informed him that
she was leaving him and moving to Los Angeles, citing the incident in September 2014.
At the time of trial, plaintiff’s annual income was approximately $418,000. Plaintiff
testified that he anticipated making less money in the future, estimating that his income would be
$356,000 for 2016, and less in subsequent years. Defendant’s annual income at the time of trial
was $110,000. Defendant testified that she does not anticipate that her income will increase in
the near future.
Before the trial court, defendant requested an equal distribution of the marital estate and
$9,000 monthly in spousal support. She further requested that the attorney fees paid by plaintiff
to his attorneys be deducted from his share of the estate, that her student loan debt and a loan
from her mother for attorney fees also be considered as part of the marital estate, and that
plaintiff be ordered to pay 79% of her attorney fees. The trial court found that the student loan
was defendant’s separate property for purposes of distributing the marital estate, and further
found that defendant had failed to present proof of the terms of the loan from her mother. The
trial court also declined to deduct plaintiff’s attorney fees from his share of the marital estate,
awarded defendant $3,500 a month in rehabilitative spousal support for a period of five years,
and denied defendant’s request for attorney fees. Defendant now appeals.
II. ANALYSIS
A. SPOUSAL SUPPORT
Defendant challenges the trial court’s award of spousal support, arguing that (1) the
award is inequitable because the trial court failed to consider her lifestyle, needs, and prior
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standard of living when making the award, and (2) the time limit of the award prevents defendant
from seeking further support in the future. We disagree.
A trial court is authorized to award spousal support under MCL 552.23(1), which
provides in relevant part:
Upon entry of a judgment of divorce or separate maintenance, if the estate
and effects awarded to either party are insufficient for the suitable support and
maintenance of either party and any children of the marriage who are committed
to the care and custody of either party, the court may also award to either party
the part of the real and personal estate of either party and spousal support out of
the real and personal estate, to be paid to either party in gross or otherwise as the
court considers just and reasonable, after considering the ability of either party to
pay and the character and situation of the parties, and all the other circumstances
of the case.
The decision to award spousal support is within the discretion of trial court, and this court
will affirm the trial court’s ruling unless we are “firmly convinced that it was inequitable.”
Richards v Richards, 310 Mich. App. 683, 690; 874 NW2d 704 (2015). A trial court abuses its
discretion when its decision “falls outside the range of reasonable and principled outcomes.”
Woodington v Shokoohi, 288 Mich. App. 352, 355; 792 NW2d 63 (2010). When evaluating the
issue of spousal support, the trial court “should make specific factual findings regarding the
factors that are relevant to the particular case.” Myland v Myland, 290 Mich. App. 691, 695; 804
NW2d 124 (2010) (citation omitted). We review a trial court’s factual findings with respect to
spousal support for clear error. Richards, 310 Mich. App. at 690. The findings of fact are
“presumptively correct, and the burden is on the appellant to show clear error.” Gates v Gates,
256 Mich. App. 420, 432; 664 NW2d 231 (2003). “A finding is clearly erroneous if, after a
review of the entire record, the reviewing court is left with the definite and firm conviction that a
mistake was made.” Woodington, 288 Mich. App. at 355. If the trial court’s findings of fact are
not clearly erroneous, we then determine whether the dispositional ruling was fair and equitable
under the circumstances of that case. Loutts v Loutts, 298 Mich. App. 21, 26; 826 NW2d 152
(2012).
In this case, defendant does not challenge the trial court’s factual findings as erroneous,
but instead argues that the award of spousal support is inequitable because the trial court failed to
consider her lifestyle, needs, and prior standard of living, and therefore failed to award defendant
adequate spousal support. When awarding spousal support, the objective is “to balance the
incomes and needs of the parties in a way that will not impoverish either party, and support is to
be based on what is just and reasonable under the circumstances of the case.” Woodington, 288
Mich. App. at 356. In determining the issue of spousal support, a trial court should consider
(1) the past relations and conduct of the parties, (2) the length of the marriage, (3)
the abilities of the parties to work, (4) the source and amount of property awarded
to the parties, (5) the parties’ ages, (6) the abilities of the parties to pay alimony,
(7) the present situation of the parties, (8) the needs of the parties, (9) the parties’
health, (10) the prior standard of living of the parties and whether either is
responsible for the support of others, (11) contributions of the parties to the joint
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estate, (12) a party’s fault in causing the divorce, (13) the effect of cohabitation on
a party’s financial status, and (14) general principles of equity. [Olson v Olson,
256 Mich. App. 619, 631; 671 NW2d 64 (2003).]
The trial court is not required to evaluate every factor, only those factors relevant to the
particulars of the case. See Cassidy v Cassidy, 318 Mich. App. 463, 475; 899 NW2d 65 (2017).
In this case, the trial court made the following findings on the issue of spousal support:
1. Past relations and conduct of the parties. Plaintiff claimed that defendant’s
failed shoe business caused the marriage to end. Defendant claimed plaintiff’s
“night terrors” caused the marriage to end. The court finds no fault [of]
significance to either party under this factor.
2. Length of marriage. The parties were married for 28 years.
3. Abilities of the parties to work. Plaintiff earned significant income of over
$300,000 the last several years, although he projects decreases in the years to
come. Defendant has worked for the same employer the last two years and will
earn $110,000 this year. Also, defendant has an MBA and aspirations to get
additional education which will only enhance her earning capacity. Each party
has the ability to earn a more than adequate income, but plaintiff’s earning ability
will exceed that of the defendant.
4. Source and amount of property awarded to the parties. For the most part, the
parties’ primary assets consist of various pension plans. Each party has been
awarded the same value in pension plans. Those assets will provide income in
another 10 years or so. The parties have been awarded equal amounts of the
marital assets.
5. The parties’ ages. The Parties are in their mid-forties and close in age.
6. Abilities of the parties to pay spousal support. Plaintiff has the ability to pay
spousal support even given his assertion of over $11,000 per month in marital
debt payments.
7. Present situation of the parties. Since separation, both parties have self-
supported themselves through their employment income. Plaintiff has assumed
and paid the marital debt. Defendant has absorbed a higher cost of living in Los
Angeles, CA.
8. Needs of the parties. Each party has the basic needs for food, shelter, and
utilities. Neither party has any other unique or specialized needs.
9. Parties’ health. Both parties are in generally good health.
10. The prior standard of living of the parties and whether either is responsible
for the support of others. Neither party has any obligation to support others.
Given that the parties will each be maintaining a separate household, they will
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suffer a decreased standard of living. With different incomes, this will impact the
defendant more than the plaintiff.
11. General principles of equity. There is no specific finding under this factor
which would favor either party.
Based on the above, the court concludes that rehabilitative spousal support
should be awarded. This will afford defendant the opportunity to develop job
seniority, employment security, retirement income, and to pursue additional
education. Retroactive to November 1, 2016, plaintiff shall pay spousal support
to the defendant in the amount of $3,500 per month until September 30, 2021, i.e.
5 years of monthly spousal support.
Defendant argues that she will not be able to afford the lifestyle she had while married,
and in fact will have insufficient funds to maintain her current standard of living in Los Angeles.
Here, the trial court considered the parties’ prior standard of living and found that, by virtue of
maintaining separate households, the parties would of necessity suffer a decreased standard of
living, particularly defendant whose income is lower than plaintiff’s. To help alleviate this
situation for defendant, the trial court awarded the not insubstantial amount of $3,500 per month
for five years. The trial court noted, however, that “[d]efendant has absorbed a higher cost of
living in Los Angeles, CA.” This is supported by defendant’s proposed budget, indicating that
she would have $12,456.43 in expenses each month, including rent on her apartment in Los
Angeles, $250.00 in expenses related to “haircare/personal grooming,” and $1,200 for groceries
and dining out.
We find no basis for reversal regarding the amount of the trial court’s award of spousal
support. Here, the trial court evaluated the relevant factors in light of the circumstances and
awarded defendant substantial spousal support for five years. While the spousal support awarded
is not, perhaps, enough to support defendant in the standard of living she prefers, the objective of
spousal support is to balance the incomes and needs of the parties so that neither is
impoverished. Woodington, 288 Mich. App. at 356. Specifically, the purpose of rehabilitative
spousal support is to allow the recipient to establish economic self-sufficiency. Richards, 310
Mich. App. at 692. Defendant has already begun to establish economic self-sufficiency by
earning her MBA and obtaining a job earning $110,000 per year. We are thus not firmly
convinced that the award of spousal support in this case was inequitable. Gates, 256 Mich. App.
at 433.
Defendant next contends that the trial court erred when it limited the spousal support
award to five years. She argues that the five-year limitation inhibits her right to petition the trial
court for modification, and that the limitation was based on speculation. MCL 552.28 provides:
On petition of either party, after a judgment for alimony or other
allowance for either party or a child, or after a judgment for the appointment of
trustees to receive and hold property for the use of either party or a child, and
subject to section 17, the court may revise and alter the judgment, respecting the
amount or payment of the alimony or allowance, and also respecting the
appropriation and payment of the principal and income of the property held in
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trust, and may make any judgment respecting any of the matters that the court
might have made in the original action.
Our Supreme Court has opined that the proper reading of MCL 552.28 “is that the
Legislature intends, in cases in which alimony is initially ordered, that the court retain the power
to make necessary modifications in appropriate circumstances.” Rickner v Frederick, 459 Mich.
371, 379; 590 NW2d 288 (1999). This Court has stated that MCL 552.28 “will always apply to
any alimony arrangement adjudicated by the trial court when the parties are unable to reach their
own agreement.” Staple v Staple, 241 Mich. App. 562, 569; 616 NW2d 219 (2000). This Court
also has held that, although the trial court may have limited the duration of the award, that
limitation does not make the award nonmodifiable. Gates, 256 Mich. App. at 433.
Here, the judgment of divorce specifies alimony for a period of five years, but does not
preclude defendant from seeking modification of the spousal support order should her
circumstances change. Accordingly, we are not firmly convinced that limiting the support award
to five years was inequitable.
B. PROPERTY DIVISION
Defendant next contends that the trial court erred in its division of the marital assets.
Specifically, defendant argues that the trial court erred when it (1) excluded her student loan
from the marital estate, (2) excluded a loan to defendant from her mother from the marital estate,
and (3) excluded plaintiff’s payment of his attorney fees from the marital estate. We disagree.
A judgment of divorce is required to include “a determination of the property rights of
the parties.” MCR 3.211(B)(3). When determining the property rights of the parties in a divorce
proceeding, the trial court “must divide the marital property between the parties and, in doing so,
it must first determine what property is marital and what property is separate.” Cunningham v
Cunningham, 289 Mich. App. 195, 200; 795 NW2d 826 (2010). Marital property is that which
accrued to the husband or wife “by reason of the marriage.” MCL 552.19. This Court has stated
that, as a general rule, “marital property is that which is acquired or earned during the marriage,
whereas separate property is that which is obtained or earned before the marriage.”
Cunningham, 289 Mich. App. at 201. However, the “actions and course of conduct taken by the
parties are the clearest indicia of whether property is treated or considered as marital, rather than
separate property.” Id. at 209.
Here, defendant does not challenge the trial court’s division of the marital estate, but
rather the trial court’s decision to exclude certain items from the marital estate before division.
We review for clear error a trial court’s factual finding regarding whether a particular asset
constitutes marital property. Woodington, 288 Mich. App. at 357. In general, a marital asset is
included in the marital estate and is subject to property division between the parties, whereas
separate property is not. Id. at 358. An asset earned by either spouse during the marriage is
generally considered part of the marital estate. Id. at 364. But when apportioning the marital
estate, the parties’ manifestation of the intent to lead separate lives, such as maintaining separate
homes, can be significant. Id. Property earned after the manifestation of the intent to separate
should still be considered part of the marital estate, but when considering such property, “the
presumption of congruence that exists with respect to the distribution of the marital assets
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becomes attenuated and may result in the nonacquiring spouse being entitled to no share or a
lesser share of the property in light of all the apportionment factors.” Id.
In this case, the trial court found that defendant’s student loan, obtained shortly before
defendant accepted employment in Los Angeles, established housing there, and then informed
plaintiff that she was divorcing him, was
a separate debt belonging to defendant. She obtained the underlying educational
degree during the twilight of the relationship. The degree never made a
contribution to the marital estate. The evidence failed to show a “concerted
family effort” for the degree. There was no mutual plan/decision to pursue the
degree or share in its benefits.
Because the debt was incurred during the marriage, the debt generally would be included
in the marital estate even though it was incurred just before defendant manifested her intent to
separate from plaintiff. But even if included in the marital estate, in thereafter dividing the estate
the trial court could have properly considered the proximity to the acquisition of the debt to
defendant’s manifesting her intent to separate from plaintiff in assigning the responsibility for
the debt. The trial court thus could have properly determined, after considering the
apportionment factors, that plaintiff as the “nonacquiring spouse” was not obligated to any share
of that debt. See Id. at 364. In other words, under the circumstances of this case, had the student
loan debt been included in the marital estate, it nonetheless would have been within the trial
court’s discretion to allocate the loan to defendant. We therefore conclude that the trial court in
this case did not abuse its discretion by allocating the student loan debt to defendant without first
placing it in the marital estate. We similarly conclude that the trial court did not abuse its
discretion in allocating to defendant the repayment of money to defendant’s mother, allegedly
borrowed by defendant during the pendency of the divorce proceedings and after the parties
manifested the intent to separate.
Defendant next argues that the trial court erred when it did not find that plaintiff had
dissipated the marital estate by using funds from the marital estate to pay his attorney fees
incurred during the divorce, and that the amount spent therefore should have been included in the
marital estate as an amount received by plaintiff. “[W]hen a party has dissipated marital assets
without the fault of the other spouse, the value of the dissipated assets may be included in the
marital estate.” Woodington, 288 Mich. App. at 368. Dissipate means to “spend or use up
wastefully or foolishly.” Merriam-Webster’s Collegiate Dictionary (11th ed). Dissipation may
also be defined as “[t]he use of an asset for an illegal or inequitable purpose, such as a spouse’s
use of community property for personal benefit when a divorce is imminent.” Black’s Law
Dictionary (10th ed).
In this case, the trial court found that
the evidence does not support defendant’s contention that plaintiff dissipated the
marital estate. Post separation, plaintiff continued his normal spending pattern.
In fact, his payment of marital debts increased the net worth of the marital estate.
Under defendant’s reasoning, defendant also dissipated the marital estate by
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spending her earnings. The court does not accept that premise. Neither party
committed “economic waste” of the marital estate.
Here, plaintiff spent $36,000 on attorney fees while defendant spent more than $70,000.
Given that plaintiff spent approximately half what defendant spent on attorney fees, defendant
cannot argue that plaintiff’s fees were excessive, lending credence to the argument that plaintiff
did not spend the money “wastefully or foolishly.” During the divorce proceedings, each party
in this case had regular income from employment. Presumably, each party used their income for
their own expenses during that time, including paying their respective attorneys, and in doing so,
neither party can be said to have dissipated the marital assets. We therefore conclude that the
trial court did not clearly err in finding that plaintiff did not dissipate the marital assets and in
declining to include that amount in the marital estate.
C. ATTORNEY FEES
Finally, defendant contends that the trial court erred when it denied her request that
plaintiff pay a portion of her attorney fees. We disagree. This Court reviews a trial court’s
decision with respect to attorney fees for an abuse of discretion. Gates, 256 Mich. App. at 437-
438. A trial court abuses its discretion when its decision “falls outside the range of reasonable
and principled outcomes.” Woodington, 288 Mich. App. at 355.
In a divorce action, attorney fees “are awarded only as necessary to enable a party to
prosecute or defend a suit . . . .” Hanaway v Hanaway, 208 Mich. App. 278, 298; 527 NW2d 792
(1995). The party requesting attorney fees in a divorce action must allege sufficient facts to
show that “the party is unable to bear the expense of the action, and that the other party is able to
pay. . . .” MCR 3.206(C). A trial court may also award attorney fees “when the requesting party
has been forced to incur expenses as a result of the other party’s unreasonable conduct in the
course of litigation.” Hanaway, 208 Mich. App. at 298. Further, “a party should not be required
to invade assets to satisfy attorney fees when the party is relying on the same assets for support.”
Gates, 256 Mich. App. at 438.
Defendant argues that the trial court should have applied the “war chest” analysis
employed in Riemer v Johnson, 311 Mich. App. 632, 639-640; 876 NW2d 279 (2015). In Riemer,
the trial court created a “war chest” of attorney fees and expert witness costs for both parties and
assigned responsibility for payment of the fees to each party based on the percentage each party
contributed to their combined annual incomes. Id. Riemer, however, does not establish that the
“war chest” theory should be applied in all cases. We therefore conclude that the trial court did
not abuse its discretion by declining to utilize the “war chest” theory in this case.
Here, defendant earns $110,000 annually, and plaintiff earns in excess of $300,000
yearly. Plaintiff’s income shows that he has the ability to pay, but given defendant’s salary, she
has not alleged sufficient facts to show that she is “unable to bear the expense of the action . . . .”
MCR 3.206(C)(2)(a). Defendant argues that “overzealous theories” advanced by plaintiff caused
her to incur additional attorney fees, but points to no specific examples of excessive zeal. She
has therefore failed to allege sufficient facts to show that she was “forced to incur expenses as a
result of the other party’s unreasonable conduct in the course of litigation.” Hanaway, 208 Mich
App at 298. Because defendant did not demonstrate that she could not pay her own attorney fees
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or that plaintiff’s unreasonable conduct forced her to incur additional expenses, the trial court’s
decision to deny her attorney fees did not “fall outside the range of reasonable and principled
outcomes.” Woodington, 288 Mich. App. at 355.
Affirmed.
/s/ Patrick M. Meter
/s/ Michael F. Gadola
/s/ Jonathan Tukel
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