Potts v. Potts

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SUPREME COURT OF ARKANSAS
No. CV-16-10
Opinion Delivered: February 16, 2017
ERIN POTTS
APPELLANT APPEAL FROM THE SEBASTIAN
COUNTY CIRCUIT COURT
V. [NO. DR-2013-858]
TIMOTHY D. POTTS HONORABLE JIM SPEARS, JUDGE
APPELLEE
REVERSED AND REMANDED;
COURT OF APPEALS’ OPINION
VACATED.
COURTNEY HUDSON GOODSON, Associate Justice
Appellant Erin Potts appeals the decree entered by the Sebastian County Circuit
Court divorcing her from appellee Timothy D. Potts. She also contests the denial of her
motion for reconsideration. For reversal, Erin contends that the circuit court erred by
deciding the parties’ property issues and modifying their agreement regarding custody and
visitation without a hearing. Further, she asserts that the court erred by omitting from the
decree their agreement for Tim to move to Northwest Arkansas. We agree that the circuit
court erred in depriving the parties of a hearing on the issues in dispute, and we reverse and
remand.
The record reflects that Erin and Tim married in January 2010 and separated in
September 2013. The union produced one child, a daughter, J.P. Tim filed a complaint
for divorce in October 2013 seeking joint custody of J.P. and an equitable distribution of
the parties’ assets and liabilities. Erin answered the complaint and also filed a counterclaim
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for divorce. She sought sole custody of their daughter and that Tim be required to pay
child support. Erin also asked for the circuit court to determine their property rights and
the allocation of their debts, unless otherwise agreed upon by the parties. Tim subsequently
filed an amended complaint alleging that he should be awarded custody of the child. He
also claimed that he had acquired a home before the marriage and that it should be awarded
as his separate, nonmarital property. In December 2013, the circuit court entered an order
granting Erin temporary custody of J.P., setting Tim’s visitation, and requiring him to pay
child support.
The circuit court scheduled a two-day, final hearing to begin on July 29, 2014. Prior
to that date, Erin filed a motion for continuance, citing discovery problems. The circuit
court heard this motion and denied it. In its ruling, the court assured the parties that the
case did not have to be concluded at that time and that it would “continue on” until they
rested their cases.
At the hearing on July 29, the parties announced that they had settled the custody
issue, and they stated their agreement on the record as follows. They agreed to share joint
custody of J.P. by alternating custody of her on a weekly basis. Their settlement included
the right of first refusal to care for the child when the parent exercising custody could not
keep her. The parent who surrendered his or her time with the child would have the right
to make up that lost time. Because Tim is a school teacher, they agreed that he would be
allowed to make up his unspent time during school breaks, holidays, and summer vacations.
Overnight visitation on Friday evenings during Erin’s week was also stated as an option.
Exercising the right to make up lost time was conditioned upon it not interfering with
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previously established plans. The parties were to mutually agree on a daycare facility at the
midpoint between their residences that would serve as the location for exchanging the child.
The parties were also to make an effort to live in the same school district. In this regard,
Tim was to make a good-faith effort to move to Fayetteville, but if he could not do so or if
it was not affordable, then Erin was to make a good-faith effort to relocate to Rogers.
Further, the parties agreed “that if at any time the Court finds by a preponderance of the
evidence that one parent demonstrates a pattern of willfully creating conflict in an attempt
to disrupt the current pending joint custody arrangement, then the Court may deem such
behavior as a material change of circumstances and may change joint custody to an order of
primary custody to the non-disruptive parent.”
With the permission of the circuit court, the parties reserved the property issues, and
they agreed to work on a settlement. Tim offered testimony to establish residency and his
grounds for divorce. The circuit court stated that it would sign a decree approved by the
parties.
A decree had not been entered by November 4, 2014. On that date, Tim filed a
motion to modify the joint-custody arrangement. He alleged that Erin had been
uncooperative and had repeatedly shown bad faith by ignoring, denying, or delaying nearly
all of his requests to make up lost time. Tim also asserted that Erin had required him to
pick up J.P. at her home as opposed to the daycare center, which reduced his time with J.P.
He claimed that he was entitled to sole custody of J.P. pursuant to their agreement, and he
submitted his affidavit in support of his accusations. In her response to the motion, Erin
denied Tim’s allegations and asserted that it was Tim who had consistently attempted to
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create conflict and disagreement. She maintained that Tim was dissatisfied with the terms
of the agreement because she had been keeping J.P. while Tim was at work.
In conjunction with her response, Erin, through her counsel, wrote a letter to the
circuit court dated November 13, 2014. She stated that the problems the parties were
encountering concerned her tardiness in dropping off J.P. at daycare and their inability to
agree upon Tim’s additional time with the child. A proposed decree to address those
difficulties was attached to the letter. Erin indicated that she objected to the settlement of
the property issues as contained in a proposed decree drafted by Tim and noted that her
proposal included an order for them to enter into settlement negotiations for ninety days,
and if that failed, for them to enter mediation.
Tim’s counsel responded with a letter to the circuit court, stating that the parties had
agreed for Tim to draft a decree setting out the custody agreement and containing an offer
for the division of property and debts. Tim complained that Erin had not indicated why
the proposed property settlement was not satisfactory and that he had not received a
counteroffer from her. He indicated that the decree proposed by Erin did not accurately
reflect the custody agreement. In addition, he objected to mediation and advised that if
they could not reach a settlement of the property issues, the court could hold a brief hearing.
Tim also requested a hearing on his motion to modify the custody agreement.
On November 21, 2014, the circuit court wrote a letter advising the parties that it
was setting aside the parties’ agreement regarding the right of first refusal because it had
“become too cumbersome.” The court also stated that if the parties did not settle the
property dispute within ten days, the marital home and its contents would be sold and the
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proceeds divided equally. Also, by an order entered on November 24, 2014, the circuit
court granted Tim sole custody of J.P. Although no hearing had been held, the court found
that Erin had “repeatedly ignored, denied, or delayed the Plaintiff’s request to make up time
with the parties’ minor child as was required by the parties’ agreement.”
In response to the circuit court’s letter ruling regarding the sale of the home, Tim’s
counsel wrote another letter to the court stating that the home had been owned by Tim
before the marriage. Tim indicated that he had purchased the property for $129,000 and
that he had applied a $10,000 gift from his grandfather toward the purchase price. Tim also
informed the court that the balance of the mortgage was $108,000. He attached an appraisal
of the property and claimed that the home had decreased in value, and he noted that it was
Erin’s burden to prove that the home had increased in value. Based on this information,
Tim asked the circuit court to reconsider its letter ruling.
Erin’s attorney responded with a letter dated November 26, 2014:
Please consider this letter a request that you allow the parties an additional ten
(10) days to try and resolve any outstanding property issues. The Defendant would
further request that the court not piecemeal the property issues as requested by the
Plaintiff. With regard to the change in visitation referenced in the Court’s letter, the
Defendant would request that the Court refrain from making any modifications to
prior rulings until evidence has been presented. At this point, there has been much
hearsay in the lengthy letters and pleadings filed by the Plaintiff. There has been no
actual proof presented to the Court that the parties have not been getting along or
that it is the fault of the Defendant. It is clear that the Plaintiff is dissatisfied with the
fact the Defendant has been able to watch the minor child during the day. Essentially,
Plaintiff is telling the Court that the parties cannot get along so he should get exactly
what he wanted in the first place. Keep in mind that the Plaintiff is not losing any
time with the parties’ child while the Defendant is keeping her during the day.
Again, the Defendant is requesting that the Court only consider evidence properly
before the Court and is objecting to the introduction or consideration of any of the
items the Plaintiff has attempted to introduce through letters to the Court or
attachments to pleadings.
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The Defendant respectfully requests that the Court set this matter for a hearing
so that any decision to modify this Order be based upon actual facts and evidence
rather than hearsay propounded by the Plaintiff. Thank you for your time and
consideration regarding this matter, and I hope we are able to have a hearing in the
near future so that these misunderstandings might be resolved.
The circuit court authored another letter on December 10, 2014, which set a date
of no later than December 19, 2014, for the parties to reach an agreement. The court
observed that Tim had purchased the home prior to the marriage but ruled that Erin would
be entitled to equity resulting from the reduction of principal by the expenditure of marital
funds. The circuit court also found that Erin was not entitled to any increased value given
the current market value, unless marital funds had been used for improvements made to the
property.
On January 27, 2015, Tim’s counsel wrote a letter to the court and attached two
proposed decrees. One version ordered the sale of all personal property. Counsel indicated
that the other, preferred, version contained what Tim had agreed upon, and he represented
that it was “very close” to the only proposal received from Erin. In the letter, Tim identified
four disputed items of personal property that he was claiming and submitted a thank-you
note from his parents to support his contention that he should be awarded one of the items,
noting that Erin would receive a dresser that had been a gift from Erin’s aunt. Tim also
stated that his parents had contributed $6,000 toward the vehicle Erin was driving and that
despite this substantial gift to him, Erin would be awarded the vehicle in the proposed
decree. Although Tim said that this particular award would result in Erin’s receiving far
more in value than he would, he stated that he would agree to this disposition if the decree
were accepted by the court. He explained that the preferred version of the decree also
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divided the parties’ debts, representing that to his knowledge, Erin did not dispute the
amount of the debt or that he had been servicing their debt. Tim also attached an
amortization schedule to support his calculation of Erin’s share of the reduction in principal
on the home.
On February 4, 2015, the circuit court entered the decree preferred by Tim. Erin
filed a timely motion for reconsideration and to modify the decree. She argued that the
decree contained multiple provisions that had not been agreed upon by the parties and for
which no testimony had been taken. She asked the circuit court to set aside the custody
provisions and to enter a decree to reflect the parties’ custody agreement. Erin also asserted
that the court should set aside the provisions relating to the division of marital property and
set a hearing. Finally, Erin argued that the court should modify the decree to allow her to
exercise visitation during spring break in 2015 because the decree allowed Tim a continuous
period of custody for twenty-two days. In response, Tim argued that the decree did not
designate spring break as a visitation period for either party because their agreement
contained specific arrangements for the holidays of Easter and Pascha, which were likely to
interfere with spring break. Further, Tim asserted that Erin had ample opportunity to
present countervailing proof but that she had failed to do so. Tim also filed a motion to
modify the decree to include a provision for visitation on Halloween.
By order dated February 23, 2015, the circuit court denied Erin’s motion for
reconsideration. The court found that “based upon the testimony of the parties and the
statements of counsel at the July 24, 2014 hearing and based upon the Court’s review of
letters from counsel and the pleadings in this case, there is sufficient evidence to support the
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Court’s entry of the Decree of Divorce as entered on February 4, 2015.” The court
modified the decree to include Halloween visitation. The circuit court also found that “the
parties did not intend that either party be awarded Spring Break visitation.”
Thereafter, Erin filed a timely notice of appeal from the decree and the order denying
reconsideration. On March 2, 2015, the circuit court entered an order denying
reconsideration and modifying the decree identical to the one filed on February 23, 2015.
The only difference between the two orders is that the March order included the attorneys’
signatures under the statement “Agreed as to Form and Content.” Erin filed an amended
notice of appeal to include a review of this order.
The appeal was first heard by the court of appeals, which affirmed that portion of the
decree dividing the parties’ property and their debts, but reversed and remanded on the issue
of custody. We accepted Erin’s petition for review. When this court grants a petition for
review, we treat the appeal as if it had been originally filed in this court. Brave v. Brave,
2014 Ark. 175, 433 S.W.3d 227.
Division of Property and Debts
Erin argues that the circuit court’s findings on the division of property and debts are
clearly erroneous because the circuit court did not conduct a hearing and thus had no
evidence upon which it could have properly made those decisions. She contends that the
circuit court’s findings are based solely on statements of Tim’s counsel found in letters
written to the court. Erin points out that she objected to the court’s consideration of the
letters as evidence and that she made requests for the circuit court to hold a hearing to
resolve these issues.
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With respect to the division of property in a divorce case, we review the circuit
court’s findings of fact and affirm them unless they are clearly erroneous or against the
preponderance of the evidence. Jones v. Jones, 2014 Ark. 96, 432 S.W.3d 36. A finding is
clearly erroneous when the reviewing court, on the entire evidence, is left with a definite
and firm conviction that a mistake has been committed. Conlee v. Conlee, 370 Ark. 89, 257
S.W.3d 543 (2007).
We agree with Erin that the circuit court erred in accepting Tim’s version of facts
and events in dividing the parties’ property and debts. Just as statements made by attorneys
during a trial are not evidence, Union Pac. R.R. v. Sharp, 330 Ark. 174, 952 S.W.2d 658
(1997), counsel’s statements of the kind here cannot be regarded as evidence upon which
to make findings of fact and conclusions of law. This was not a case where the parties agreed
to submit disputed issues to a court for resolution based on stipulations, briefing, or letters.
For instance, in Metz v. Langston, the parties agreed to present a contested issue to the circuit
court for decision based on letters, briefs, proposed orders, and supporting documentation
offered by their counsel. Metz, 2015 Ark. App. 319, 463 S.W.3d 305. When the court
accepted the husband’s proposed order, the wife filed a motion for reconsideration and asked
for a hearing. The wife appealed the denial of her motion, asserting that she had been
denied due process. The court of appeals found no merit in the argument, holding that the
wife had waived any right to a hearing by agreeing to submit proposed orders for the judge
to sign accompanied by supporting documentation and by failing to request a hearing until
after the issues had been decided. By contrast, here, the parties did not agree for the circuit
court to decide the case in this fashion. On the contrary, Erin objected to proceeding in
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this manner and requested a hearing prior to the circuit court’s decision. We hold that a
circuit court may not resolve contested factual issues by dispensing with a hearing and
accepting the position offered by one party over the other party’s objection.
We are cognizant of Tim’s argument that Erin has failed to demonstrate prejudice
resulting from the circuit court’s rulings because she has not shown that its findings are
erroneous. However, the circuit court’s decision is clearly erroneous because it is not based
on evidence properly introduced at a hearing. In this situation, a party in Erin’s position is
hard-pressed to make such a showing without having been afforded a hearing to present
evidence. To hold otherwise would excuse the circuit court’s having decided contested
issues without a hearing. This we will not do.
Tim further contends that Erin acquiesced in the action taken by the circuit court
because her attorney approved the “form and content” of the March order denying her
motion for reconsideration. Again, we disagree. In our view, the signature under that
designation represents a statement that the order accurately reflects a circuit court’s ruling.
It cannot be construed as the equivalent of an agreed order.
Custody
Along the same lines, Erin contends that the circuit court erred by modifying custody
and visitation without a hearing. For the reasons discussed above, we also hold that the
circuit court clearly erred by rendering decisions regarding custody and visitation without a
hearing. It is particularly troublesome that the circuit court would deny the parties an
opportunity to present evidence regarding custody, which is an issue that requires the court
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to determine what is in the best interest of the child. We therefore reverse on this point as
well.
Reversed and remanded; court of appeals’ opinion vacated.
Brent D. Watson, Attorney at Law, PLLC, by: Brent D. Watson, for appellant.
Medlock, Gramlich & Sexton, LLP, by: Sam Sexton III, for appellee.
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