Hope Billings McCulloch v. James Robert McCulloch , 2013 R.I. LEXIS 113 ( 2013 )

Supreme Court
No. 2011-139-Appeal.
No. 2010-433-Appeal.
(P06-1525)
Hope Billings McCulloch :
v. :
James Robert McCulloch. :
NOTICE: This opinion is subject to formal revision before publication in
the Rhode Island Reporter. Readers are requested to notify the Opinion
Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence,
Rhode Island 02903, at Tel. 222-3258 of any typographical or other
formal errors in order that corrections may be made before the opinion is
published.
Supreme Court
No. 2011-139-Appeal.
No. 2010-433-Appeal.
(P06-1525)
Hope Billings McCulloch :
v. :
James Robert McCulloch. :
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Flaherty, for the Court. After a protracted, if not epic, battle in the Family
Court, the plaintiff, Hope Billings McCulloch (Hope), appeals from a decision that granted her
complaint and the counterclaim of the defendant, James Robert McCulloch (James), for an
absolute divorce. 1 At the heart of this matter is the distribution of the stock of Microfibres, Inc.
(Microfibres), a manufacturer of fabric—of which James is the president and chief executive
officer—and Microfibres Partnership Limited (MPL), an affiliated company that owns certain
equipment and real estate in North Carolina.
On appeal, Hope argues that the trial justice erred: (1) in his determination of the
percentage of MPL that was marital property; (2) by declining to place a value on Microfibres
before he divided the marital estate; (3) by disregarding a consent order that set forth the date as
of which the marital property was to be valued; (4) by assigning Hope 25 percent of Microfibres,
thereby rendering her a minority shareholder in a closely held corporation; (5) by declining to
award Hope alimony; (6) by awarding Hope only $1,000 per week in child support; (7) by
1
In this case, we refer to the parties as Hope and James. This is for the purpose of clarity only,
and we intend no disrespect by using their first names.
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declining to award Hope fees for her attorneys, experts, and the supervisor of James’s visits with
their son Lucas James McCulloch (Lucas); and (8) by declining to order the disclosure of certain
documents and information concerning James’s will, trusts, and estate plans. Conversely, in a
protective and conditional cross-appeal, James argues that the trial justice erred when he held
that Microfibres was a marital asset and not an advance on his inheritance. For the reasons set
forth in this opinion, we affirm in part and vacate in part the Family Court’s decision pending
entry of final judgment, and we remand the matter to that tribunal for further proceedings
consistent with this opinion.
I
Background
Hope and James were married on February 14, 1989. They separated in the early part of
2005, and on June 16, 2006, Hope filed a complaint for an absolute divorce. James filed an
answer and counterclaim on May 7, 2007. As grounds for divorce, both parties cited
irreconcilable differences which caused the irremediable breakdown of the marriage. The parties
have two children, Bay Billings McCulloch, who is no longer a minor, and Lucas, who reached
the age of nineteen on June 18, 2013.
A
Proceedings Below
There were extensive proceedings in the Family Court that spanned almost five years,
producing a veritable mountain of documents and transcripts. For the sake of brevity, we will
recount only the portions of the record that are relevant to this appeal, and we will provide
additional facts in our discussion where necessary.
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It is significant that on October 17, 2008, during the course of the divorce proceedings,
the parties entered into a consent order that embodied various agreements and stipulations that
they previously had made. The pertinent provisions of that consent order read as follows:
“31. Neither party shall challenge: a) the date of valuation of
any appraisal of real estate, equipment, machinery or the
parties’ possessions by any expert after October 1, 2007, or
b) the date of the valuation of Microfibres, Inc. by any
expert after October 1, 2007.
“32. For purposes of the rule that marital assets should be valued
as of the date of trial unless there are compelling
circumstances warranting a deviation, and by agreement of
the parties, the dates of appraisals and valuation referenced
in paragraph 31 above shall be considered as if they were
appraised on the date of trial.
“33. Nothing in paragraphs 31 or 32 above shall impair or
prejudice the rights of either party to challenge any
valuation or appraisal on the merits, other than based on: 1)
the date of the valuation or appraisal, or 2) any change in
circumstances surrounding the valued assets from February
to May 27, 2008, unless such change of circumstances is
determined by the trial justice to be an extraordinary
change in circumstances that could not have been
contemplated by the parties, provided, however, that the
party in possession of any asset shall not claim, contend or
urge that any such extraordinary change of circumstances
shall have occurred with respect to any such asset unless he
or she has disclosed such change of circumstances
promptly and in no event more than three business days
after the change in circumstance having occurred.”
At trial, the court heard testimony from Mary Ann Beirne, the chief financial officer of
Microfibres. She testified about the company’s plan to purchase a controlling interest in a
printing and dyeing company in China (the China venture). Ms. Beirne further testified that if
the China venture were to fall through, it would be devastating for Microfibres. James also
testified that Microfibres had been losing money each year and that the success of the China
venture was vital to the survival of the company.
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Three experts testified about the value of Microfibres and MPL. Peri Ann Aptaker, a
certified public accountant (CPA), testified on behalf of Hope; John Brough, Jr., CPA, testified
on behalf of James; and Jay Fishman, a neutral, court-appointed expert engaged to assist the trial
justice regarding the valuation of the two business entities, also testified. Aptaker was called
upon first. She testified that she prepared a report embodying her opinion that the fair market
value of Microfibres, as of December 31, 2007 was $126,365,000. 2 However, she also testified
that she “couldn’t place [a] value o[n] the China investment,”—which was initiated after
December 31, 2007—because she had no data available to her that she could use to predict what
impact, if any, that that venture might have on Microfibres. Aptaker was later recalled to testify
at a time when she had more information available to her about the China venture; however,
even in this later testimony, she said that she had not completed an updated valuation of the
company and that the numbers she had reviewed with regard to the China venture were merely
estimates. Therefore, she remained unable to “provide an opinion of value with respect to the
China venture.” Finally, she testified that one must take into account the state of the economy
when valuing a company. In fact, the trial justice took judicial notice of the worldwide economic
crisis that had occurred since the valuation date to which the parties had agreed.
John Brough, Jr., James’s expert, then testified. He opined that a $126 million value for
Microfibres was not justified. Rather, his analysis led him to believe that the company had a
value of $106 million. Similar to Aptaker, he testified that when valuing the company he “had
no available information about the [China venture] because the deal was not closed” as of
December 31, 2007.
2
Although the consent order provided that the valuation date was to be October 1, 2007,
throughout the record and in the parties’ briefs, the trial justice and the parties refer to the
valuation date as December 31, 2007. After a thorough review of the record, this Court is
unaware of when, or even if, the valuation date was formally changed to December 31, 2007.
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Finally, Jay Fishman, the court-appointed expert, testified. He said that “there ha[d] been
a meltdown in the financial market since” the December 31, 2007 valuation date. He testified
that “consumer spending [wa]s way off” and “millions of jobs ha[d] been lost. So the financial
conditions of the * * * countries [Microfibres] would sell to and sell in * * * ha[d] changed
dramatically.” Additionally, he said, “[b]oth [parties’] experts received insufficient information
and, therefore, I received insufficient information to place a value or an economic benefit on the
China venture at [December 31, 2007].”
B
Decision
On August 17, 2010, the trial justice issued a lengthy written decision in which he
granted an absolute divorce to both parties on the ground of “irreconcilable differences between
the parties which have caused the irremediable breakdown of the marriage.” He awarded the
parties joint custody of Lucas, with primary physical placement with Hope and regular luncheons
and other reasonable visitations with James.
The trial justice then addressed the equitable assignment of the marital property. First, he
addressed the assets—with the exception of Microfibres and MPL—that the parties had
stipulated were marital property. These assets included three homes and their contents, two
vacant lots, two automobiles, three country club and golf club memberships, certain jewelry, and
various bank accounts and investment accounts that totaled more than $16 million. Before
distributing the property, the trial justice examined each factor set forth in G.L. 1956 § 15-5-
16.1(a). 3
3
General Laws 1956 § 15-5-16.1(a), entitled “Assignment of property,” provides:
“In addition to or in lieu of an order to pay spousal support made
pursuant to a complaint for divorce, the court may assign to either
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The trial justice found that the parties had been married on February 14, 1989 and
separated in April 2005, and that, despite some “aggravating” and “hurtful” conduct by both
parties, neither one was at fault for the breakdown of the marriage. He then addressed “the
contribution of each of the parties during the marriage [in] the acquisition, preservation or
appreciation in value of their respective estates.” He found that early in the marriage, Hope
contributed to the couple’s income from her “minimal employment” and her rental property;
however, he then observed that:
“It [wa]s clear and unequivocal that [James] was the primary
source of the significant wealth that was accumulated during this
marriage. It was [James]’s employment in the family business that
made it possible for this family to develop the estate * * *.
Likewise, it was [James] who managed the family’s investment
the husband or wife a portion of the estate of the other. In
determining the nature and value of the property, if any, to be
assigned, the court after hearing the witnesses, if any, of each party
shall consider the following:
“(1) The length of the marriage;
“(2) The conduct of the parties during the marriage;
“(3) The contribution of each of the parties during the marriage
in the acquisition, preservation, or appreciation in value of their
respective estates;
“(4) The contribution and services of either party as a
homemaker;
“(5) The health and age of the parties;
“(6) The amount and sources of income of each of the parties;
“(7) The occupation and employability of each of the parties;
“(8) The opportunity of each party for future acquisition of
capital assets and income;
“(9) The contribution by one party to the education, training,
licensure, business, or increased earning power of the other;
“(10) The need of the custodial parent to occupy or own the
marital residence and to use or own its household effects taking
into account the best interests of the children of the marriage;
“(11) Either party’s wasteful dissipation of assets or any
transfer or encumbrance of assets made in contemplation of
divorce without fair consideration; and
“(12) Any factor which the court shall expressly find to be just
and proper.”
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accounts to the successful point that ha[d] been achieved,
notwithstanding the difficult market.”
The trial justice then considered “[t]he contribution and services of either party as a
homemaker.” He found that Hope “played the role primarily of homemaker,” but that James
“provided [her] with either a [n]anny, or household help, or both, in order to reduce the
homemaker’s responsibilities.” Furthermore, James “did most of the family cooking when he
was home” and “he contributed to the care of the children.” Moving to the next statutory factor,
the trial justice found that Hope was in “good health,” but that James suffered from some
physical or emotional malady and that he had had health issues with his back and his hip.
As to the next factor, he found that Hope derived income from personal investments, as
well as from support provided by James; he also found that James’s income consisted of his
salary and distributions from Microfibres. Regarding the occupations and employability of the
parties, the trial justice found that Hope had not been part of the work force for twenty years and
that James was currently employed as the chief executive of Microfibres. He concluded that
both parties would be in a position to acquire further assets and income, based on the substantial
amount of assets that they currently owned. He also found that “[n]either party contributed
materially to the education, training, or licensure of the other”; however, James “certainly ha[d]
placed [Hope] in the position of increasing her earning power by reason of his contributions of
assets to the marital estate to which she [wa]s a beneficiary.”
The trial justice found that the tenth statutory factor—[t]he need of the custodial parent to
occupy or own the marital residence—“[wa]s not material in this case” because there were two
domiciles. Finally, he found that there was no wasteful dissipation of assets or any transfer or
encumbrance of assets made in contemplation of divorce without fair consideration.
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After reviewing each of the statutory factors, the trial justice awarded each party 50
percent of their bank and investment accounts and 50 percent of one of the country club
memberships. He assigned Hope one home and its contents, both automobiles that were in her
possession, and all the jewelry that was in her possession. He assigned James the remaining two
homes and their contents, the two vacant lots, the remaining golf club membership and country
club membership, as well as the jewelry that was in his possession.
The trial justice then addressed the knotty issue of the equitable distribution of
Microfibres and MPL. Echoing his holding from April 28, 2008 on Hope’s motion for partial
summary judgment, the trial justice declared that the stock in Microfibres—all of which stood in
James’s name—was a marital asset. He also found that only 49.9967 percent of MPL was
marital property, because the remainder had been either acquired by James before the marriage
or had been gifted to him. 4 See § 15-5-16.1(b) (“The court may not assign property or an interest
in property held in the name of one of the parties if the property was held by the party prior to
the marriage[.] * * * The court shall not assign property * * * which has been transferred to one
of the parties by gift * * *.”).
After an extensive review of the expert testimony in the case, and relying on the October
17, 2008 consent order, the trial justice decided to order an in-kind distribution of the stock of
Microfibres and an in-kind distribution of a partnership interest in MPL, instead of valuing the
companies and assigning a portion of that value to each party. He found that he “d[id] not have
before [him] any probative or credible evidence upon which to base a fair and reasonable
valuation of the value of the stock in th[e] corporation,” because “since [December 31, 2007],
there ha[d], in fact, been an extraordinary change in circumstances that could not have been
4
Microfibres owned a 10 percent interest in MPL and, therefore, that portion was accounted for
when the trial justice distributed Microfibres.
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contemplated by the parties.” The extraordinary change in circumstances included, the trial
justice asserted, “structural changes in the world economy” caused by “a meltdown in the
financial market.” That economic crisis, coupled with the fact that “[t]he ‘China Venture’ had
not been finalized,” and the fact that “[n]one of the experts had given any detailed consideration
to the potential impact of” that venture, led the trial justice to conclude that he was unable to
accurately value Microfibres and MPL. For these reasons, the trial justice determined that “[t]he
only fair and equitable method of assigning to [Hope] a portion of the corporate assets would be
by assigning to her a portion of the corporate stock,” instead of a sum in cash.
In deciding what percentage of that stock to award to Hope, the trial justice found that
Hope
“made little or no contribution to [Microfibres or MPL]. It was a
family business in the family of [James] for multiple generations. *
* * Notwithstanding th[e] finding [that Microfibres was a marital
asset], [Hope] ha[d] in no significant way done anything to
contribute towards the acquisition, preservation or appreciation of
the corporate assets.”
He found that “she may have done some decoration at [a] property owned by the corporation,”
but that “that essentially [wa]s the limit of her contribution.” The trial justice “acknowledge[d]
that she served as a homemaker and as such [wa]s entitled to a share of the marital assets which
include[d] Microfibres.” However, he held “that it would be completely inequitable for her to
receive a portion of the share in Microfibres, Inc. equal to that of [James] whose blood, sweat
and tears and contributions by his family ha[d] been the reason for both the past success and
what hopefully w[ould] be the future success of this corporation.” Based on these findings, and
relying on the factors enumerated in § 15-5-16.1, the trial justice awarded Hope 25 percent of the
stock in Microfibres and 25 percent of that portion of MPL that he had determined to be marital
property. James received 75 percent of those two assets.
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Next, the trial justice addressed the issue of alimony. He examined the statutory factors
set forth in § 15-5-16 and reincorporated his previous findings from his equitable distribution
analysis. He also emphasized the great wealth that the parties enjoyed and specifically found
that “[t]he totality of [Hope]’s estate weighs heavily upon this [c]ourt in its determination as to
whether or not alimony is justified in this case.” Given Hope’s assets and the language of § 15-
5-16(c)(2)—which provides that “[a]limony is designed to provide support for a spouse for a
reasonable length of time to enable the recipient to become financially independent and self-
sufficient”—the trial justice denied her request for alimony.
The trial justice then addressed the issue of child support for Lucas. After considering
the statutory factors enumerated in § 15-5-16.2, the child support guidelines set forth in Family
Court Administrative Order 2007-07, and the evidence of the parties’ incomes and Hope’s
expenses associated with raising Lucas, the trial justice ordered James to pay Hope $1,000 per
week. He also ordered James to pay all expenses reasonably connected with Lucas’s education,
summer camp, vacations with James, and all medical and dental expenses.
Finally, the trial justice denied Hope’s request for fees, citing to this Court’s opinion in
Thompson v. Thompson, 642 A.2d 1160 (R.I. 1994), in which we held that “before awarding
counsel fees, the trial justice must determine that the party seeking the award is without funds or
property available to pay the fees * * *.” Id. at 1165 (quoting Stevenson v. Stevenson, 511 A.2d
961, 967 n.6 (R.I. 1986)). Because Hope was in possession of substantial assets, including those
awarded to her in the equitable distribution of the marital estate, the trial justice denied her
request for counsel, expert witness, and other fees. On October 1, 2010, Hope filed a notice of
appeal, and on October 20, 2010, James filed a conditional and protective cross-appeal. The two
appeals were consolidated by this Court.
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II
Standard of Review
“[T]he trial justice is accorded broad discretion with respect to the equitable distribution
of marital assets; consequently, we will not overturn the trial justice’s distribution unless it is
demonstrated that he or she has abused his or her discretion.” Tondreault v. Tondreault, 966
A.2d 654, 659 (R.I. 2009) (quoting DeAngelis v. DeAngelis, 923 A.2d 1274, 1277 (R.I. 2007)).
“As long as the trial justice did not overlook or misconceive relevant and material evidence, and
as long as he or she considered the requisite statutory elements set forth in § 15-5-16.1, we will
not disturb the trial justice’s assignment of property.” Tondreault, 966 A.2d at 659. Furthermore,
it is well established that this Court will not disturb the trial justice’s credibility determinations
or findings “of fact in a divorce action ‘unless he or she has misconceived the relevant evidence
or was otherwise clearly wrong.’” Id. at 660 (quoting DeAngelis, 923 A.2d at 1277). “However,
when this Court reviews questions of law in an appeal from the Family Court, ‘we must apply a
de novo review.’” Curry v. Curry, 987 A.2d 233, 238 (R.I. 2010) (quoting Schwab v. Schwab,
944 A.2d 156, 158 (R.I. 2008)).
“[A]lthough [a consent order] ‘receives a court’s imprimatur,’ [it] is ‘in essence a
contract’ and therefore must ‘be construed as a contract * * *.’” Vanderheiden v. Marandola, 994
A.2d 74, 78 (R.I. 2010) (quoting Now Courier, LLC v. Better Carrier Corp., 965 A.2d 429, 435
(R.I. 2009)). “If a contract is clear and unambiguous, the meaning of its terms presents a
question of law for the court[,]” which we review de novo. State Department of Environmental
Management v. Administrative Adjudication Division, 60 A.3d 921, 924 (R.I. 2012) (quoting
Rotelli v. Catanzaro, 686 A.2d 91, 94 (R.I. 1996)). “Likewise, this Court reviews issues of
statutory interpretation de novo.” Bucci v. Lehman Brothers Bank, FSB, No. 2010-146-A, 2013
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WL 1498655, at *6 (R.I. April 12, 2013). “When a statute is clear and unambiguous we are
bound to ascribe the plain and ordinary meaning of the words of the statute and our inquiry is at
an end.” Id. (quoting Town of Burrillville v. Pascoag Apartment Associates, LLC, 950 A.2d 435,
445 (R.I. 2008)).
Finally, “[a] trial justice’s award of attorney’s fees is subject to review for abuse of
discretion.” Kells v. Town of Lincoln, 874 A.2d 204, 214 (R.I. 2005) (quoting In re Estate of
Cantore, 814 A.2d 331, 334 (R.I. 2003)). Similarly, “[w]e have consistently held that ‘[i]n
granting or denying discovery motions, a [trial] justice has broad discretion,’” and “we will not
disturb [his or her] decision relating to discovery ‘save for an abuse of that discretion.’” Dawkins
v. Siwicki, 22 A.3d 1142, 1150 (R.I. 2011) (quoting Travelers Insurance Co. v. Hindle, 748 A.2d
256, 259 (R.I. 2000)). However, “[t]his Court reviews the grant of a motion for summary
judgment de novo.” People’s Credit Union v. Berube, 989 A.2d 91, 93 (R.I. 2010).
III
Discussion
In her appeal, Hope argues that the trial justice erred: (1) in his determination of the
percentage of MPL that was marital property; (2) by declining to place a value on Microfibres
before dividing the marital estate; (3) by disregarding the consent order that set forth the date as
of which the marital property was to be valued; (4) by assigning Hope 25 percent of Microfibres,
thereby making her a minority shareholder in a closely held corporation; (5) by declining to
award Hope alimony; (6) by awarding Hope only $1,000 per week in child support; (7) by
declining to award Hope fees for her attorneys, experts, and the supervisor of James’s visits with
Lucas; and (8) by declining to order the disclosure of certain documents and information
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concerning James’s will, trusts, and estate plans. We shall address each of these arguments in
turn.
A
Equitable Distribution
It is well settled that “[t]he equitable distribution of property in a divorce action involves
three steps: (1) determining which assets are marital property; (2) considering the factors set
forth in G.L. 1956 § 15-5-16.1(a); and (3) distributing the property.” Tondreault, 966 A.2d at 662(quoting DeAngelis, 923 A.2d at 1277). With this established procedure in mind, we will first
address Hope’s argument about the percentage of MPL that should properly be considered to be
marital property.
1
The Percentage of MPL that is Marital Property
Hope presents a two-fold argument with respect to MPL: She contends that the trial
justice did not make sufficient factual finding to support his determination that James acquired
20 percent of MPL before the marriage, and she also asserts that he erred when he found that
20.0033 percent of MPL was gifted to James by his father. 5 James responds by arguing that the
trial justice’s findings were sufficient to support his ruling that the disputed portions of MPL
either were acquired before the marriage or were gifted to him and, furthermore, that there is an
adequate foundation in the record to support those findings.
5
Hope also argues that the trial justice erred by not placing a value on MPL before distributing
the marital assets; however, we shall address this argument together with her similar contention
regarding the need to value Microfibres.
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It is undisputed that 10 percent of MPL is owned by Microfibres, and James concedes
that 49.9967 percent of MPL is marital property. Therefore, it is the remaining 40.0033 percent
of the company that is at issue. In his decision, the trial justice found that:
“The uncontradicted evidence shows that with respect to the
partnership, MPL, a portion of [James]’s interest was gifted to him
by his father. That portion was 20.0033%. The Court finds that
that portion gifted to [James] is not assignable under Section 15-5-
16.1, as it is not legally a marital asset. [Additionally, James]
claims that 20% of MPL was owned by him prior to the marriage.
The Court can certainly award as marital assets in accordance with
the statute, any appreciation of the value of that 20% after the date
of marriage. However, there is no such evidence to show
appreciation of that prior 20%. [James] has stipulated that
49.9967% of MPL is a marital asset. Therefore, the Court will
assign to [Hope] 25% of the 49.9967% of MPL, as it is clearly
assignable under Section 15-5-16.1[.]”
From the above-quoted portion of the decision, it is clear to us that the trial justice
concluded that James owned 20 percent of MPL before the marriage, and certainly the record
supports this finding. On June 10, 2008, James testified that he had a 20 percent interest in MPL
and that he acquired it prior to the marriage. Although the trial justice’s finding with respect to
that 20 percent interest was perhaps not as explicit as it could have been, it is clear from the
context of the trial justice’s remarks that he chose to accept James’s testimony and that the 20
percent in dispute was owned by James prior to the marriage and, therefore, was not part of the
marital estate. We hold that there was no error in this finding.
Additionally, the record contains three documents, labeled as deeds of gift, which, taken
together, evidence a transfer of a 20.0033 percent interest in MPL from James’s father, Norman
E. McCulloch, Jr. (Norman), to James, without consideration. The record is devoid of anything
that would belie that these transfers were gifts. See Ruffel v. Ruffel, 900 A.2d 1178, 1189 (R.I.
2006) (“The elements of a valid gift are a ‘present true donative intent on the part of the donor,’
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and ‘some manifestation such as an actual or symbolic delivery of the subject of the gift so as to
completely divest the donor of dominion and control of it.’” quoting Black v. Wiesner, 112 R.I.
261, 267, 308 A.2d 511, 515 (1973)). Therefore, the trial justice did not err when he found that
this 20.0033 percent interest in MPL was gifted to James by his father, and thus, it was not
marital property. Accordingly, we see no error in the trial justice’s determination that the entire
contested portion of MPL was not marital property.
2
The Valuation of Microfibres and MPL
Hope’s next argument is that the trial justice abused his discretion when he assigned to
her a percentage of Microfibres and MPL without first placing a value on those assets. She
contends that this was error because: (1) § 15-5-16.1 requires that a value be placed on all marital
property, and (2) the trial justice could not have determined whether the distribution was
equitable without first assigning a value to the property. James counters by arguing that, in
Rhode Island, a valuation of marital property prior to distribution is not required as a matter of
law.
Section 15-5-16.1(a), entitled “Assignment of property”, provides that:
“In addition to or in lieu of an order to pay spousal support
made pursuant to a complaint for divorce, the court may assign to
either the husband or wife a portion of the estate of the other. In
determining the nature and value of the property, if any, to be
assigned, the court after hearing the witnesses, if any, of each party
shall consider the following [twelve factors] * * *.” (Emphasis
added.)
Hope argues that the phrase “[i]n determining the nature and value of the property” creates a
statutory obligation that requires a trial justice to measure the worth of all marital property before
he or she assigns it. Id. (emphasis added). However, in our opinion, this phrase does not create
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such a command. This Court has never held that a trial justice is required to value all marital
property before he or she distributes it.
Indeed, we have endorsed a trial justice’s distribution of a marital estate in the absence of
placing a value on some of the property. In Tondreault, 966 A.2d at 664, the trial justice “was
unable * * * to specify the values of the[ IRA] accounts cited by the husband because they had
not been provided by the parties.” Nonetheless, this Court held that,
“[g]iven their control over their respective records, it was
reasonable to expect that the parties could, between themselves,
determine these appreciation values. Furthermore, the exact values
of each marital asset were of little consequence to the trial justice’s
decision because the trial justice distributed each marital asset by
percentage to each party rather than by totaling the values of all
assets and making an assignment based on the sum value of the
marital estate.” Id.Therefore, we held that “[t]here was no error,” and we affirmed the trial justice’s distribution of
the IRA accounts. Id.To support her position, Hope cites Curry, 987 A.2d at 246-47, and Gervais v. Gervais,
735 A.2d 214, 214 (R.I. 1999) (mem.). However, these cases do not address the issue of whether
a trial justice must value all the property in a marital estate; instead, they deal merely with the
time as of which the marital property should be valued. Curry, 987 A.2d at 246 (“[M]arital
assets should be valued as of the date of trial unless there are compelling circumstances
warranting a deviation.” quoting Gervais, 735 A.2d at 214); Gervais, 735 A.2d 214 (deciding
whether “the trial justice erred in refusing to make additional findings of fact to support the
valuation of the marital estate at a date other than the date of judgment” (emphasis added)).
Therefore, we are not persuaded that we should adopt a bright-line, per se rule that would require
a trial justice to place a value on all marital property before he or she distributes it.
- 16 -
Nonetheless, in this case, it is our opinion that there was an abuse of discretion when the
trial justice declined to value Microfibres and MPL before assigning them. This is so, in part,
because those assets constitute such an enormous portion of the marital estate. The experts
engaged by the parties valued the companies as of December 31, 2007, at between $106 million
and $126 million. Although the values of these companies may have fluctuated since that date, it
cannot be gainsaid that Microfibres and MPL compose the vast majority of the marital estate.
More importantly, the trial justice’s decision not to place a value on the specific portions
of Microfibres and MPL that he assigned to the parties also constituted an abuse of discretion,
because he assigned the parties unequal percentages, thereby rendering Hope a minority
shareholder of a closely held corporation. Without knowing the values of the portions of the
companies that he assigned to each party, we are unable to review whether the entire distribution
was equitable.
We recognize, as did the trial justice, that an assignment of stock in a closely held
corporation, which makes one spouse a minority shareholder, is generally disfavored and should
be avoided whenever possible. See Robbins v. Robbins, 549 So. 2d 1033-34 (Fla. Dist. Ct. App.
1989) (“Such a financial arrangement is intolerable, * * * and places the spouse without any real
control over the closely held corporation at a distinct disadvantage to the spouse who runs the
business.”); Josephson v. Josephson, 772 P.2d 1236, 1243 (Idaho Ct. App. 1989) (holding that a
distribution of “stock in a closely held corporation, with majority control in one spouse and with
virtually no public market for the stock * * * does little to completely separate the parties and
their property”); Savage v. Savage, 658 P.2d 1201, 1205 (Utah 1983) (“[W]henever possible,
continued joint ownership by divorced spouses of closely held corporate stock should be avoided
- 17 -
* * *.”); see also Stephen W. Schlissel, The Hazards of “In-Kind” Distributions of Closely-Held
Stock in Divorce Actions, 17 J. Am. Acad. Matrim. Law. 381 (2001).
Although we do not hold that it is always error to distribute the stock in a closely held
corporation such that one spouse is rendered a minority shareholder, it was, in our opinion, error
in this case not to value the ownership interests that were assigned to each party. Here, the trial
justice assigned Hope 25 percent of Microfibres and MPL; however, a 25 percent, minority share
of a closely held corporation will likely not be the equivalent of 25 percent of the total value of
the company. First, this is true because stock in a closely held corporation, which is not publicly
traded, lacks liquidity because there is no established public market for the stock. See 18A Am.
Jur. 2d Corporations § 373 at 247 (2004). Second, a minority shareholder lacks control over the
company, and therefore, the value of his or her stock is diluted in comparison to that of a
majority shareholder. See id. at 248.
Although, this Court has “adopt[ed] the rule of not applying [a minority discount or] a
discount for lack of marketability” in the context of an action for dissolution of a closely held
corporation, we believe that such discounts are appropriate, and even necessary, when valuing an
in-kind distribution of a minority share of a closely held corporation in a divorce action.
DiLuglio v. Providence Auto Body, Inc., 755 A.2d 757, 774 (R.I. 2000) (quoting Charland v.
Country View Golf Club, Inc., 588 A.2d 609, 613 (R.I. 1991)). The reason that these discounts
are not applied “when a corporation elects to buy out a shareholder who has filed for dissolution”
is that “[m]inority shareholders should not receive less than [fair market] value if, instead of
fighting the dissolution action, the majority decides to * * * buy out the minority * * *.”
Charland, 588 A.2d at 613 (quoting Robert B. Heglar, Rejecting the Minority Discount, 1989
Duke L.J. 258, 269 n.63 (1989)). Thus, in those situations, the corporation itself is a willing
- 18 -
buyer, and the rule against applying a minority discount is imposed only to protect the minority
shareholder who is bringing the action.
In this case, however, if the trial justice were to assign Hope an in-kind, minority share of
Microfibres and MPL, Hope would be assigned illiquid assets that have no ready market, and she
would be left with no control over the companies. Thus, both a minority discount and a
marketability or illiquidity discount must be applied when valuing the portions of the companies
that will be assigned to each party. However, if the trial justice had awarded Hope the cash
equivalent of her equitable ownership interest in the companies, or if he had crafted some other
assignment, such discounts would not be necessary. See Josephson, 772 P.2d at 1244 (holding
that “such discounting will not be applicable here when the magistrate awards all shares to [one
spouse] and orders compensation or an offsetting award of other property to [the other spouse]”).
It is not lost on us that Microfibres and MPL comprise an enormous portion of the
marital estate. In view of this fact, and because the trial justice assigned to Hope an in-kind,
minority share of the two entities, it is our opinion that the trial justice was required to place a
value on those companies. Moreover, he should have placed a value on the portions of the two
entities that he assigned to each party to ensure that his distribution of the marital estate was truly
equitable.
Finally, because we are satisfied that this case required these value determinations, we
decline to address Hope’s contention that an assignment of only 25 percent of Microfibres and
MPL to her was inequitable and, thus, an abuse of discretion. Because we are unable to review
- 19 -
the value of the 25 percent assignment in comparison to the remainder of the marital estate, we
are unable to determine whether this assignment to her was equitable. 6
3
The Consent Order
Hope also argues that the trial justice erred when he, sua sponte, disregarded the October
17, 2008 consent order, in which the parties had agreed to a valuation date for the marital
property. James contends that the terms of the consent order permitted the trial justice to find
that there was a change in circumstances that rendered the valuation date obsolete and that the
trial justice correctly found that a change in circumstances had, in fact, occurred based on the
experts’ testimony concerning the worldwide economic crisis and the unknown value of the
China venture.
Although Hope argues that the trial justice’s decision to disregard the agreed-upon
valuation date was sua sponte , this contention is not entirely accurate, despite the unconventional
manner in which the trial justice made his decision, which we shall briefly recount. On April 9,
2009, James submitted his posttrial memorandum, in which he argued that, based on the experts’
testimony, the trial justice could not reasonably place a value on Microfibres because of the
“unforeseeable and dramatic downturn” in the worldwide economy that occurred after the
6
Also, because we are unable to fully review the distribution of the marital estate, we decline to
pass on Hope’s arguments about alimony and child support at this time, because those analyses
may depend on the trial justice’s assignment of marital property on remand. See Marsocci v.
Marsocci, 911 A.2d 690, 699-700 (R.I. 2006) (declining to reach the issue of child support until
the trial justice performed a valuation and equitable distribution); Ruffel v. Ruffel, 900 A.2d
1178, 1193 (R.I. 2006) (“[T]he proper amount to award for alimony, if any, will depend on the
ultimate distribution of the marital estate by the Family Court on remand * * *.”). Furthermore,
on June 18, 2013, Lucas turned nineteen years old, thus, in all likelihood, rendering any issue
concerning child support moot. See § 15-5-16.2(b) (“The court may, if in its discretion it deems
it necessary or advisable, order child support * * *, but in no case beyond [a child’s] nineteenth
(19th) birthday.”).
- 20 -
valuation date contained in the consent order. Further, James argued in his posttrial
memorandum “that the current economic crisis, or structural change in the world economy, [wa]s
an extraordinary circumstance that was not anticipated by the parties.” Thus, James argued that
the “arbitrary valuation date” contained in the consent order should no longer be utilized by the
parties. Some four months later, on August 7, 2009, while the trial justice was conducting a
hearing on an unrelated motion, he informed the parties of his intent to order a revaluation of
Microfibres as of a more current date. In response, on August 21, 2009, Hope filed an
“objection to and motion for reconsideration of” the trial justice’s decision to revalue the
company. On August 27, 2009, the trial justice held a hearing on Hope’s motion to reconsider;
however, he denied that motion and he ordered that the two companies be revalued as of
September 1, 2009. Then, on January 19, 2010, the trial justice ordered the parties to suspend
their revaluation efforts, because he had decided to equitably distribute the stock of the
companies without placing a value on them.
In the past, this Court has held that “[a] stipulation entered into with the assent of counsel
and their clients, relative to an evidentiary fact or an element of a claim, is conclusive upon the
parties and removes the issue from the controversy,” and therefore, “[i]t is no longer a question
for consideration by the tribunal.” In re McBurney Law Services, Inc., 798 A.2d 877, 881-82
(R.I. 2002). Furthermore, we have held that “[a]n order consented to by the parties can not be
‘opened, changed or set aside without the assent of the parties in the absence of fraud, mutual
mistake or actual absence of consent[.]’” Id. at 882 (quoting Douglas Construction and Supply
Corp. v. Wholesale Center of North Main Street, Inc., 119 R.I. 449, 452, 379 A.2d 917, 918
(1977)).
- 21 -
In this case, the parties entered into a consent order—that was agreed to by the parties
and their counsel—which established the valuation date for the marital property. As a result, in
the usual case, this valuation date would “no longer [be] a question for consideration by the
tribunal.” In re McBurney Law Services, Inc., 798 A.2d at 882. However, in this case, paragraph
thirty-three of the consent agreement expressly allows either party to challenge the valuation date
based on a change in circumstances, if the trial justice finds that it is “an extraordinary change in
circumstances that could not have been contemplated by the parties.”
Although James arguably challenged the agreed-upon valuation date in his posttrial
memorandum, and the trial justice did hold a hearing—albeit after rendering his decision on that
specific issue—we believe that the manner in which the trial justice made his decision to
disregard the valuation date was error, given the sanctity that our law confers upon consent
orders. See In re McBurney Law Services, Inc., 798 A.2d at 881-82. First, the hearing was held
on Hope’s motion to reconsider—not James’s challenge—and it did not occur until after the trial
justice had already informed the parties that he intended to establish a new valuation date.
Furthermore, even the trial justice at one point described his decision to order a revaluation of
the companies as “sua sponte,” which indicates that he was not ruling on James’s challenge, but
rather, that he had decided on his own that the agreed-upon valuation date should be abandoned.
Indeed, at the hearing on Hope’s motion to reconsider, the trial justice never mentioned James’s
posttrial challenge to the valuation date. Therefore, the manner in which the trial justice deviated
from the terms of the consent order—to which the parties had agreed, and which the trial justice
himself had earlier approved—constituted error.
Although it would have been more appropriate for the trial justice to have explicitly ruled
on James’s challenge to the valuation date, and, more importantly, to have held a hearing before
- 22 -
making this ruling, we nonetheless cannot say that this error, on its own, requires that the matter
be remanded for a rehearing. We see little to be gained by holding the parties to a valuation date
of five-and-a-half years ago, and, after a thorough review of the record, we do not believe that
remanding the matter for a proper hearing on James’s challenge to the valuation date will, in any
way, change the trial justice’s decision to depart from the date contained in the consent order. 7
However, because the trial justice erred when he declined to value his assignments of
Microfibres and MPL, as discussed in the previous section of this opinion, we remand this case
for a trial to determine those values, as of the date of that trial, unless the parties reach a new
agreement regarding a valuation date. See Curry, 987 A.2d at 246 (holding that “marital assets
should be valued as of the date of trial” quoting Gervais, 735 A.2d at 214); see also Esposito v.
Esposito, 38 A.3d 1, 6 (R.I. 2012) (“Parties may make an express agreement to change the
terminal date for equitable distribution * * *.” quoting Ruffel, 900 A.2d at 1185).
B
Assessment of Fees
In Hope’s next line of argument, she contends that the trial justice erred when he denied
her requests for reimbursement of fees for attorneys’, experts, and the court-appointed supervisor
for James’s visits with Lucas. First, Hope argues that the trial justice “abused [his] discretion
when [he] did not require [James] to reimburse Hope for her legal fees and costs [incurred in her
7
Hope asserts that James never gave notice that he was challenging the valuation date based on a
change in circumstances, as required by the terms of the consent order. However, on October 17,
2008, the same day that the consent order was entered into, James’s attorneys informed Hope’s
attorneys, via email, that they “consider[ed] the current worldwide economic conditions
exceptional circumstances that were not in contemplation of the parties at the time of the
stipulation concerning the valuation date for [Microfibres], and that such circumstance may have
a material impact on the value of [Microfibres], and otherwise.” In our opinion, this email
sufficiently “disclosed [the] change of circumstances,” as required by the consent order, and
provided Hope with sufficient notice of James’s challenge.
- 23 -
efforts] to establish that [James] did not obtain Microfibres by inheritance in connection with
[her] summary judgment motion” concerning whether the company was a marital asset. She
contends that she should have been awarded attorneys’ fees associated with that summary
judgment motion because James took an “unreasonable and untenable position” “[i]n the face of
overwhelming, undisputed evidence” to the contrary. Additionally, she contends that she should
have been awarded a portion of her legal fees and costs because James was “recalcitrant in
providing discovery in this case.”
Generally, in a divorce matter, “[a]n award of attorney’s fees is not punitive in nature but
serves to ensure that a spouse who lacks financial stability is still able to secure competent
representation in the divorce proceeding.” Thompson, 642 A.2d at 1165. Thus, as the trial
justice held, “[i]t is well established that ‘before awarding counsel fees, the trial justice must
determine that the party seeking the award is without funds or property available to pay the fees
and that the spouse who will be charged with payment of the fees has the financial ability to
satisfy the obligation.’” Id. (quoting Stevenson, 511 A.2d at 967 n.6). Here, however, the trial
justice found that Hope had “substantial liquid assets,” and, consequently, “ha[d] the ability to
compensate her own attorneys.”
Before this Court, Hope argues that that holding by the trial justice was an abuse of
discretion because her request for attorneys’ fees was not based on her inability to pay, but
instead on “[James]’s conduct in this case.” Thus, in reality, Hope is asking this Court to impose
a sanction on James by exercising our “inherent power to fashion an appropriate remedy that
would serve the ends of justice.” Blue Cross & Blue Shield of Rhode Island v. Najarian, 911
A.2d 706, 711 n.5 (R.I. 2006) (quoting Vincent v. Musone, 574 A.2d 1234, 1235 (R.I. 1990)).
But, as we have held in the past,
- 24 -
“[t]his remedy * * * is available only in one of three narrowly
defined circumstances: (1) pursuant to the ‘common fund
exception’ that ‘allows a court to award attorney’s fees to a party
whose litigation efforts directly benefit others[,]’ * * *; (2) ‘as a
sanction for the willful disobedience of a court order[,]’ * * *; or
(3) when a party has ‘acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.’” Id. (quoting Chambers v. NASCO, Inc.,
501 U.S. 32, 45, 45-46 (1991)).
Hope does not argue that either of the first two circumstances exist in this case, but only that
“[James]’s conduct” during the litigation warrants an award of legal fees. However, in our
opinion, Hope has failed to demonstrate that James “acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.” Id. (quoting Chambers, 501 U.S. at 45-46). Therefore, we cannot say
that the trial justice abused his discretion when he denied Hope’s request for attorneys’ fees.
Next, Hope argues that the trial justice erred when he denied her request that James be
required to reimburse the marital estate for his expert fees and for her legal fees incurred in
countering those experts. Hope contends that James should reimburse the marital estate because
he later did an about-face and abandoned his experts’ opinions in his posttrial memorandum and,
thus, he needlessly squandered marital assets when he hired the experts in the first place. James
argues that the trial justice was correct when he denied Hope’s request for expert fees, because
the experts did not possess sufficient information to value the China venture and they were hired
to opine as to the value of Microfibres before the world economy was thrown into the throes of
economic crisis. Therefore, James argues, there should be no basis to sanction him for declining
to argue values that he believed were no longer valid or that had lost relevance because of the
China venture. We agree.
As Jay Fishman—the court-appointed valuation expert—testified, “there ha[d] been a
meltdown in the financial market since” the stipulated valuation date. Furthermore, he said that
“[b]oth [parties’] experts received insufficient information and, therefore, I received insufficient
- 25 -
information to place a value or an economic benefit on the China venture at [the stipulated
valuation date].” Additionally, in his decision, the trial justice said that, after the economic crisis
and without sufficient evidence on the China venture, he “d[id] not have before [him] any
probative or credible evidence upon which to base a fair and reasonable valuation of the value of
the stock in th[e] corporation.” Based on Fishman’s testimony, which the trial justice found to
be credible, James should not be required to reimburse the marital estate for his experts’ fees
simply because he challenged the efficacy of their valuations at a later date. Furthermore, Hope
fails to cite a single case to support her contention that a party in James’s position should be
required to reimburse a marital estate after changing his position about his experts’ findings.
Therefore, we see no error in the trial justice’s denial of Hope’s request for expert fees.
Hope’s last argument regarding fees is that the trial justice abused his discretion when he
did not order James to pay her share of the costs of the supervised visits between James and
Lucas, because, according to Hope, the supervision was necessary as a result of James’s conduct.
However, this argument is not well developed. Hope commits only four sentences to it in her
brief. Additionally, she cites no legal authority to support her allegation that the trial justice
abused his discretion when he declined to order James to pay those fees. Therefore, she has
presented nothing to this Court that would warrant a reversal of the trial justice’s denial of her
request. See Bucci, 2013 WL 1498655, at *16 n.17 (“[a] mere passing reference to an argument
such as this, without meaningful elaboration, will not suffice to merit appellate review.” quoting
State v. Day, 925 A.2d 962, 974 n.19 (R.I. 2007)).
- 26 -
C
Will, Trust, and Estate-Planning Documents
Hope’s final argument is that the trial justice erred when he denied her request that James
disclose information about his will, trusts, and other estate-planning documents. First, she
argues that James should have been ordered to disclose these documents because they were
relevant to the issue of whether James was unfaithful. James counters by arguing that there is no
evidence in the record that suggests that he was unfaithful and, therefore, that the trial justice did
not abuse his discretion when he denied Hope’s request.
After a careful review of the record, we cannot say that the trial justice abused his
discretion when he refused to order James to disclose his will and estate-planning documents.
Hope offers very little reasoning for her argument, other than to say that these documents “were
relevant to whether [James] was unfaithful to Hope prior to this divorce being final,” because
“[James] refused to disclose [one of] the new beneficiar[ies].” She suggests no other evidence of
unfaithfulness, and we can find no such evidence in the record. Therefore, the trial justice was
well within his discretion to deny her discovery request for James’s will and other estate-
planning documents. See Dawkins, 22 A.3d at 1150 (recognizing a trial justice’s “broad
discretion” in ruling on discovery motions (quoting Hindle, 748 A.2d at 259)).
Next, Hope argues that the trial justice erred when he denied her motion to compel
disclosure of information about James’s trusts; however, we do not believe that the trial justice
abused his discretion when he denied this motion. On January 19, 2010, the trial justice
conducted a hearing on Hope’s motion to compel further discovery of James’s trusts. In denying
the motion, the trial justice said that, at that juncture, he had not yet distributed the marital estate
and that James had made no indication that he would not be able to comply with any order of
- 27 -
assignment. Therefore, the trial justice held that the requested information concerning James’s
trusts would not be relevant until after the assignment of marital property. Likewise, we are of
the opinion that any review of the denial of this motion would be premature, because we are
vacating, in part, the decision pending entry of final judgment in this case, which will require a
new equitable distribution of the marital estate. Accordingly, we decline to address this issue on
the merits at this time.
Finally, Hope argues that the information about James’s trusts was relevant to the issue of
alimony; however, in our opinion, the trial justice did not abuse his discretion when he denied
the motion. In his decision, the trial justice quoted § 15-5-16(c)(2), which provides, in pertinent
part, that “[a]limony is designed to provide support for a spouse for a reasonable length of time
to enable the recipient to become financially independent and self-sufficient.” He then
specifically found that Hope had “sufficient assets and income” such that “an award of alimony
would not be justified.” We do not see how ordering the disclosure of additional information
about James’s trusts would have, in any way, changed this finding. Therefore, upon review, we
discern no error by the trial justice. 8 See Dawkins, 22 A.3d at 1150.
D
James’s Conditional Cross-appeal
After Hope filed her appeal in this case, James filed a protective and conditional cross-
appeal, arguing that the trial justice erred when he granted partial summary judgment and found
Microfibres to be a marital asset. James avowed that he would not press this issue on appeal if
8
Hope further contends that the information about James’s trusts was relevant to the issue of
child support. However, on June 18, 2013, Lucas turned nineteen years old, thus, likely
rendering any issue concerning child support moot. See § 15-5-16.2(b) (“The court may, if in its
discretion it deems it necessary or advisable, order child support * * *, but in no case beyond [a
child’s] nineteenth (19th) birthday.”). Therefore, we need not address Hope’s argument about
this discovery motion as it relates to child support for Lucas.
- 28 -
this Court affirmed the Family Court’s decision pending entry of final judgment; however,
because we now vacate part of that decision, we shall address James’s conditional cross-appeal.
In his cross-appeal, James raises two arguments. First, he contends that the trial justice
erred when he concluded that an advance on inheritance—which occurred while the transferor
was alive—was not a “transfer[] to one of the parties by inheritance” under § 15-5-16.1(b), and,
therefore, such an advancement was marital property. 9 Furthermore, James argues that the trial
justice erred by deciding a question of fact on summary judgment when he found that James’s
acquisition of the stock in Microfibres was not an advance on his inheritance. Assuming,
without deciding, that an advance on inheritance should be considered to be a “transfer[] * * * by
inheritance” under § 15-5-16.1(b), which would render those assets nonmarital, we hold that
there was no genuine issue of material fact that would have precluded summary judgment, and
we agree with the trial justice that, as a matter of law, the transfer of Microfibres stock was, in
fact, a sale.
The transfer of the stock to James was part of a larger recapitalization of the company.
On November 15, 1989, James sent an “offer to purchase for $105,000 in cash the 30,000 shares
of Common Stock of Microfibres, Inc.” to the trustees of the trust that owned the stock at that
time. Then, in a series of letters, the trustees accepted James’s offer to purchase the stock.
Additionally, other internal company documents evidence the recapitalization and refer to the
transfer of stock to James as a “purchase” and “sale.”
9
Section 15-5-16.1(a) provides, in pertinent part, that “[i]n addition to or in lieu of an order to
pay spousal support made pursuant to a complaint for divorce, the court may assign to either the
husband or wife a portion of the estate of the other,” however, “[t]he court * * * shall not assign
property or an interest in property which has been transferred to one of the parties by inheritance
before, during, or after the term of the marriage.” Section 15-5-16.1(b).
- 29 -
At the summary judgment hearing, the trial justice held that these documents were “clear,
unequivocal, and unambiguous.” He then went on to say:
“The meaning of the word ‘sale’ and ‘purchase’ have no
ambiguity, which would leave room for the [c]ourt to further
render interpretation. [James] paid $105,000 for stock in the
corporation which had been independently appraised for [$]64,562.
The money that [James] paid was a bonus to him by the
corporation, which was clearly marital funds, a marital asset
subject to assignment under Section 15-5-16.1. There is no issue
of fact * * *.”
On appeal, James does not dispute the characterization of the “paper transaction”;
however, he argues that his and his father’s intent as to whether the transfer of stock was an
inheritance was a question of fact that was inappropriately decided on summary judgment.
However, it is well settled that “[w]hen a contract is unambiguous, * * * the intent of the parties
becomes irrelevant.” Vincent Co. v. First National Supermarkets, Inc., 683 A.2d 361, 363 (R.I.
1996) (holding that “we need not examine the intent of the parties since the language of [the
contract] is clear, unambiguous, and open to only one reasonable interpretation”). Thus, “[w]hen
contract language is clear and unambiguous, words contained therein will be given their usual
and ordinary meaning and the parties will be bound by such meaning.” Singer v. Singer, 692
A.2d 691, 692 (R.I. 1997) (mem.).
The documentary evidence in this case leaves no doubt that the transfer of stock to James
was a sale. The terms “purchase” and “sale” that are used in James’s offer and the trustees’
acceptances are unambiguous and are not “reasonably susceptible of different constructions.”
Paul v. Paul, 986 A.2d 989, 993 (R.I. 2010) (quoting Andrukiewicz v. Andrukiewicz, 860 A.2d
235, 238 (R.I. 2004)). Thus, the intent behind the transaction was irrelevant. Vincent Co., 683
A.2d at 363.
- 30 -
Furthermore, this Court has held that, where a transfer was made to appear like a sale and
included all indicia of a sale, it was not erroneous for the trial justice to rule that the transaction
was, in fact, a sale, regardless of the parties’ ulterior intent. Gervais v. Gervais, 688 A.2d 1303,
1305-06 (R.I. 1997). 10 In Gervais, the husband in a divorce proceeding argued that certain
disputed “assets were derived from the sale of a company that he had acquired by virtue of two
separate gifts of stock,” and, therefore, he maintained that the assets were not marital property.
Id. at 1305. The husband “contend[ed] this last transfer was made to appear like a sale in order
to avoid federal gift and estate taxes but that it was in reality a gift in disguise.” Id. (emphasis
added). Nevertheless, this Court found no error in the trial justice’s ruling that the transfer of
stock was a sale—not a gift—because, regardless of the husband’s intent, “the transfer at its
inception had all indicia of a sale.” Id. at 1306.
Therefore, based on the precedent set forth in Gervais and the unambiguous terminology
used in the transaction, any possible hidden intent of the parties is irrelevant to the analysis of
whether the Microfibres stock constituted marital property and, thus, there was no genuine issue
of material fact. As a result, the trial justice did not err when he granted partial summary
judgment in favor of Hope and held that the Microfibres stock was marital property.
IV
Conclusion
For the reasons set forth in this opinion, we affirm those parts of the Family Court’s
decision pending entry of final judgment that address the portion of MPL that is martial property,
as well as the denial of Hope’s request for attorneys’, expert, and other fees. Furthermore, we
10
Although Gervais v. Gervais, 688 A.2d 1303, 1304-05 (R.I. 1997), was decided after a trial on
the merits, we are satisfied that here, summary judgment was appropriate because the documents
were clear, unequivocal, and open to only one reasonable interpretation.
- 31 -
affirm the trial justice’s denial of Hope’s motion for disclosure of information about James’s will
and estate-planning documents, and we affirm the trial justice’s grant of partial summary
judgment holding that the stock of Microfibres was marital property.
However, we vacate the portion of the decision pending entry of final judgment that
addresses the equitable distribution of the marital estate, and we remand the case to the Family
Court for further proceedings consistent with this opinion. On remand, the Family Court shall
value Microfibres and MPL as of the date of trial and distribute the marital estate in accordance
with § 15-5-16.1. The trial justice shall permit the parties to supplement the existing record by
offering any additional testimony or other evidence that may assist him. The Family Court then
shall issue a decision pending entry of final judgment that is not inconsistent with this opinion.
- 32 -
RHODE ISLAND SUPREME COURT CLERK’S OFFICE
Clerk’s Office Order/Opinion Cover Sheet
TITLE OF CASE: Hope Billings McCulloch v. James Robert McCulloch.
CASE NO: No. 2011-139-Appeal.
No. 2010-433-Appeal.
(P06-1525)
COURT: Supreme Court
DATE OPINION FILED: June 25, 2013
JUSTICES: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
WRITTEN BY: Associate Justice Francis X. Flaherty
SOURCE OF APPEAL: Providence County Family Court
JUDGE FROM LOWER COURT:
Associate Justice Howard I. Lipsey
ATTORNEYS ON APPEAL:
For Plaintiff: David A. Wollin, Esq.
For Defendant: Lauren E. Jones, Esq.