Scott Briggs v. Estate of Sarah Briggs ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
SCOTT BRIGGS, UNPUBLISHED
July 23, 2015
Plaintiff-Appellee,
v No. 318943
Wayne Circuit Court
Family Division
ESTATE OF SARAH BRIGGS, LC No. 11-104599-DM
Defendant-Appellant
Before: SERVITTO, P.J., and STEPHENS and M. J. KELLY, JJ.
PER CURIAM.
Defendant1 appeals as of right from a judgment of divorce. We affirm.
Defendant first argues that the trial court erred when it determined that plaintiff does not
own a business that could be distributed as part of the marital estate. We disagree.
This Court reviews a trial court’s factual findings regarding the division of marital
property for clear error. Cunningham v Cunningham, 289 Mich. App. 195, 200; 795 NW2d 826
(2010). A finding of fact is clearly erroneous if this Court has “a definite and firm conviction
that a mistake has been made.” Id. This Court reviews issues of law de novo. Id.
The trial court in a divorce action must divide the marital property between the two
parties to the divorce. Cunningham, 289 Mich. App. at 200. Property is categorized as marital or
separate. See id. at 201. The trial court must decide what property is marital property and what
property is separate property. Id. at 200. “Generally, 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.” Id. at 201. The trial court then must divide the marital property, which
constitutes the marital estate, between the parties in an equitable manner in light of the
circumstances of the case. Id. The trial court must “consider the duration of the marriage, the
contribution of each party to the marital estate, each party’s station in life, each party’s earning
1
Defendant Sarah Briggs died during these proceedings. On order of the Court, the caption was
amended to substitute her name individually for that of her estate. Briggs v Briggs, unpublished
order of the Court of Appeals, entered July 9, 2015 (Docket No. 318943).
-1-
ability, each party’s age, health and needs, fault or past misconduct, and any other equitable
circumstance.” Woodington v Shokoohi, 288 Mich. App. 352, 363; 792 NW2d 63 (2010).
In McNamara v McNamara, 178 Mich. App. 382, 392-393; 443 NW2d 511 (1989), mod
on other grounds 436 Mich. 862 (1990), this Court held that the trial court erred when it did not
determine the value of the defendant’s law practice. The trial court refused to evaluate the law
practice because it could not reasonably place a value on the practice. Id. at 392. This Court
held that the trial court erred because the law practice had a market value. Id. at 393. This Court
noted, “One need not be a lawyer or judge to know that a law practice, in which an experienced
practitioner of some sixteen years can gross a 1985 income of $147,628 before expenses, has
some worth.” Id. This Court held that the value of the law practice was the “value to defendant
as a going concern.” Id. at 393. Thus, the basis for determining whether a person owns a
business for the purposes of distribution of the marital estate is whether the business had market
value as a going concern. See id. at 392-393. The value of a business as a going concern is “the
value based upon the probability that it will earn money.” Cullen v Voorhies, 232 Mich. 420,
431; 205 N.W. 177 (1925).
We conclude based upon the record below, that plaintiff’s profession as an insurance
agent has no market value as a going concern. Plaintiff derives his income from individual
clients whom he solicits and there was no evidence that he had a significant core of repeat clients
or what is termed "a book of business." Plaintiff receives lump sum payments for each
investment made. Plaintiff incurs expenses associated with his work but neither his tax returns
nor any testimony presented at the hearing demonstrated that plaintiff had any business assets or
liabilities. No evidence was introduced as to market value for the sale of the source of plaintiff's
income. Thus, plaintiff’s profession does not have any market value outside of plaintiff’s
earnings because plaintiff only acts as a middleman between the insurance company and the
client. See McNamara, 178 Mich. App. at 392-393. Defendant argues that plaintiff was not an
employee, made between $500,000 and $1,000,000 each year, and incurred between $60,000 and
$90,000 in business expenses each year. However, defendant fails to establish how the fact that
plaintiff made an income as an independent contractor and incurred expenses as part of his job
requires this Court to conclude that the trial court erred in failing to find that plaintiff owns a
business. Thus, the trial court did not err in finding that plaintiff had no business for the
purposes of distribution of the marital estate. See McNamara, 178 Mich. App. at 392-393.
Defendant also fails to establish how the fact that plaintiff files a Schedule C form with
his federal income tax return requires this Court to hold that the trial court erred in failing to find
that plaintiff owns a business. Michael C. Thomas, the parties’ accountant, explained that the
fact that a person files a Schedule C with his or her income tax return does not mean that the
person owns a business. Thomas explained that he had filed a Schedule C for individuals who
were not business owners. Even Joseph Cunningham, defendant’s valuation expert, stated
during his testimony that it was possible for someone who did not own a business to file a
Schedule C form. Thus, the fact that plaintiff filed a Schedule C form does not mean that
plaintiff owns a business. Furthermore, even if the fact that plaintiff filed a Schedule C form
meant that he owns a business for the purpose of his federal income taxes, defendant fails to
show how this fact requires this Court to hold that the trial court erred in failing to find that
plaintiff’s job has value as a marital asset. Therefore, the fact that plaintiff has filed Schedule C
forms with his federal income tax returns does not require this Court to hold that the trial court
-2-
erred in failing to find that plaintiff owns a business for the purposes of division of the marital
estate. See McNamara, 178 Mich. App. at 392-393.
Additionally, even assuming that plaintiff does own a business, defendant fails to show
that the business had any market value that could be divided as a marital asset. Plaintiff testified
that he has an office at Retirement Strategies. He does not own the office and does not pay any
rent to Retirement Strategies. There was no testimony presented at the hearing that indicated that
plaintiff keeps a book of business or has any accounts receivable. Plaintiff does incur expenses
for office supplies, paperwork, postage, and telephones, in connection with his job. However, to
the extent that plaintiff had office supplies and other tangible property that he used to sell
insurance, the property was taken into account in the divorce judgment because the trial court
distributed all of plaintiff’s personal property to him. Therefore, even if plaintiff does own a
business, the business does not have any market value. See Cunningham, 289 Mich. App. at 200;
McNamara, 178 Mich. App. at 392-393. Defendant does not otherwise challenge the trial court’s
distribution of the marital assets. For the reasons stated above, defendant’s claim fails.
Defendant next argues that the trial court abused its discretion when it denied her motion
for attorney fees and expert witness fees. We disagree.
“This Court reviews for abuse of discretion a trial court’s decision to award attorney fees
and expert witness fees.” Stoudemire v Stoudemire, 248 Mich. App. 325, 344; 639 NW2d 274
(2001). “An abuse of discretion occurs when the trial court’s decision falls outside the range of
reasonable and principled outcomes.” Smith v Smith, 278 Mich. App. 198, 207; 748 NW2d 258
(2008). “Any findings of fact on which the trial court bases an award of attorney fees are
reviewed for clear error, but questions of law are reviewed de novo.” Reed v Reed, 265 Mich
App 131, 164; 693 NW2d 825 (2005) (internal citations omitted).
MCL 552.13(1) provides:
In every action brought, either for a divorce or for a separation, the court
may require either party to pay alimony for the suitable maintenance of the
adverse party, to pay such sums as shall be deemed proper and necessary to
conserve any real or personal property owned by the parties or either of them, and
to pay any sums necessary to enable the adverse party to carry on or defend the
action, during its pendency. It may award costs against either party and award
execution for the same, or it may direct such costs to be paid out of any property
sequestered, or in the power of the court, or in the hands of a receiver. [Emphasis
added.]
MCR 3.206(C)(2) provides:
A party who requests attorney fees and expenses must allege facts
sufficient to show that
(a) the party is unable to bear the expense of the action, and that the other
party is able to pay, or
-3-
(b) the attorney fees and expenses were incurred because the other party
refused to comply with a previous court order, despite having the ability to
comply.
The trial court has discretion to award attorney fees in divorce actions. Borowsky v Borowsky,
273 Mich. App. 666, 687; 733 NW2d 71 (2007). The party requesting fees has the burden to
produce facts to justify the award. Ewald v Ewald, 292 Mich. App. 706, 725; 810 NW2d 396
(2011). “This would include proving both financial need and the ability of the other party to pay,
as well as the amount of the claimed fees and their reasonableness.” Id. (citations omitted).
The trial court did not abuse its discretion when it denied defendant’s motion for attorney
fees and expert witness fees. First, as discussed above, the trial court properly concluded that
plaintiff does not own a business for the purpose of distribution of the marital estate. Defendant
notes in her brief on appeal that she requested the $20,000 in attorney fees and $5,000 in expert
witness fees in connection with the business issue. Thus, the trial court did not abuse its
discretion because the trial court had discretion to deny defendant’s claim, and defendant lost on
the underlying issue. See MCL 552.13(1); MCR 3.206(C)(2); Borowsky, 273 Mich. App. at 687.
In addition, it is not clear that the amount defendant requested was necessary to enable
her to carry on her claim or defend the action. Cunningham testified that he was paid $1,000 for
his testimony at the evidentiary hearing. He explained that his fee to determine the value of
plaintiff’s business would be $1,500. Thus, defendant only incurred $1,000 in expert witness
fees in connection with the evidentiary hearing on whether plaintiff owned a business.
Defendant fails to explain the discrepancy between the $1,000 that she paid Cunningham and her
request of $5,000 in expert witness fees. In addition, defendant does not state in her brief on
appeal, and did not explain in the trial court, whether the $20,000 attorney fee request was
necessary to carry on her claim or defend the action. Instead, defendant merely asserted that she
was entitled to $20,000 in attorney fees without explaining how she arrived at that number.
Thus, the trial court did not abuse its discretion with regard to defendant’s request for attorney
and expert witness fees since defendant fails to show that the $20,000 in attorney fees and $5,000
in expert witness fees were necessary to carry on her claim or defend the action. See MCL
552.13(1); MCR 3.206(C)(2); Borowsky, 273 Mich. App. at 687. Furthermore, the fact that
plaintiff paid at least $20,000 in defendant’s legal fees indicates that the additional attorney fees
were not necessary for defendant to carry on her claim or defend the action. See MCL
552.13(1); MCR 3.206(C)(2); Borowsky, 273 Mich. App. at 687. The trial court did not abuse its
discretion in denying defendant’s motion for attorney and expert witness fees.
Affirmed.
/s/ Deborah A. Servitto
/s/ Cynthia Diane Stephens
/s/ Michael J. Kelly
-4-