Robert A. Masters v. Leah Masters

FOR PUBLICATION
Oct 29 2014, 9:45 am
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
MICHAEL A. SETLAK MICHAEL H. MICHMERHUIZEN
Shilts Law Office Barrett & McNagny LLP
Fort Wayne, Indiana Fort Wayne, Indiana
CORNELIUS B. HAYES
Hayes & Hayes
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
ROBERT A. MASTERS, )
)
Appellant/Cross-Appellee, )
)
vs. ) No. 02A04-1404-DR-178
)
LEAH MASTERS, )
)
Appellee/Cross-Appellant. )
APPEAL FROM THE ALLEN SUPERIOR COURT
The Honorable Charles F. Pratt, Judge
Cause No. 02D07-1204-DR-261
October 29, 2014
OPINION - FOR PUBLICATION
NAJAM, Judge
STATEMENT OF THE CASE
In this contentious dissolution action, the parties submitted to arbitration pursuant
to the Family Law Arbitration Act, Indiana Code Sections 34-57-5-1 to -13. After
several hearings, the arbitrator entered numerous findings of fact and conclusions of law,
and the trial court reduced the arbitrator’s findings and conclusions to judgment
accordingly. See Ind. Code § 34-57-5-7 (2014). In her findings and conclusions, the
arbitrator, among other things, dissolved the marriage of Robert A. Masters (“Husband”)
and Leah Masters (“Wife”); valued and distributed the vast majority of the marital assets;
resolved questions of child custody, support, and parenting time; and determined the
parties’ respective incomes, whether actual or imputed. In particular, the arbitrator found
that Husband had an annual income of $80,000; that he must immediately pay $17,735 in
back child support; that he must pay to Wife $23,965.05 in cash within 100 days of the
arbitrator’s order to equalize the parties’ marital assets; that he must replenish $51,000 in
the parties’ bank accounts; and that he should be awarded $93,843 in the valued portion
of the marital estate. The arbitrator then ordered Husband to pay $95,000 of Wife’s
attorney’s fees.
On appeal, Husband challenges only the arbitrator’s finding that he pay $95,000 of
Wife’s attorney’s fees. We hold that the arbitrator’s finding is clearly erroneous because
it does not consider Husband’s ability to pay Wife’s attorney’s fees in light of his
earnings, living expenses, and valued assets, or in light of the other obligations the
arbitrator imposed on Husband. Further, we reject Wife’s arguments on cross-appeal as
well as each party’s request under Appellate Rule 66(E) for appellate attorney’s fees.
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Reversed and remanded with instructions.
FACTS AND PROCEDURAL HISTORY
After the parties had made several appearances before an arbitrator on the
dissolution of their marriage, the arbitrator entered numerous findings of fact and
conclusions of law pursuant to Indiana Code Section 34-57-5-7, which the trial court
reduced to judgment pursuant to Section 34-57-5-7(d)(1). According to the following
relevant and undisputed findings and conclusions:
1. The parties were married on August 21, 1993.
2. There has been an irretrievable breakdown of the marriage between
Wife and Husband and their marriage should be dissolved.
3. Wife and Husband are the parents of one child, namely, [E.M.], born
on January 22, 2007.
4. Husband filed a Verified Petition for Dissolution on April 3, 2012.
***
7. On May 18, 2012, Wife filed a Verified Counter-Petition for
Dissolution of Marriage.
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1. [sic] This has been a very contentious divorce.
***
20. The parties do not live in close proximity to one another . . . . Wife
and [E.M.] reside in Allen Park, Michigan, with Wife’s mother and father,
Paul and Dona Dawson. Husband resides in Brevard, North Carolina.
***
72. For child support purposes, Husband’s income should be [$80,000].
His income should not include any imputed income from his prior
employment.
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73. Expert testimony was provided that Wife would be required to
obtain six (6) mandated credits and three (3) readying credits to renew her
teaching certificate, which could be completed in one (1)[] or[,] easily, two
(2) semesters.
74. Full-time teachers in public schools in Michigan have an annual
salary range[] from [$33,000] (rural) to [$48,500] (urban).
75. Other opportunities for Wife’s employment utilizing her [existing]
college degree are:
a. Para Educator (with Elementary Education degrees pays $11-
14 per hour)[.]
b. Public charter school—pays approximately 75% of public
school salary.
c. Home bound teacher—contracts at $25.00 per hour
(Avondale School District in Detroit, Michigan[,] averaged 30 hours
per week).
d. Intermediate school districts—$24,000 to $34,000 per year[.]
76. Allen[] Park, Michigan[,] is an urban school district, but Wife
testified that she desires to work at E.M.’s [parochial] school.
77. In 2012, Wife was unemployed, in part[] because she was busy
moving and getting E.M. settled in a new school. Minimum wage of
[$290] per week[, or $15,080 annually,] is imputed to her for all of 2012.
78. In 2013, Wife could have been employed as a Para Educator;
therefore, income of [$450] per week[, or $23,400 annually,] is imputed to
her for all of 2013.
79. Commencing January 1, 2014, [$40,000] annual income is imputed
to Wife, who could have acquired her Michigan teaching license by this
time.
80. Commencing April 3, 2012, until January 1, 2013, Husband shall
pay child support of [$180] per week.
81. Commencing January 1, 2013, until January 1, 2014, Husband shall
pay child support of [$172] per week.
82. Commencing January 1, 2014, . . . Husband shall pay . . . [$161] per
week.
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***
86. Based upon the aforestated, as of March 14, 2014, Husband is
[$17,735] in arrears on his obligation for child support, which sum is to be
paid, forthwith.
***
90. It is reasonable to have all future tuition and fee expenses at Inter-
City Baptist School [E.M.’s parochial school] shared by Mother and Father
in accordance with their respective income percentages (67%/33%) . . . .
***
92. Wife’s father shall be reimbursed the tuition expense for [E.M.’s]
enrollment at The Inter-City Baptist School during the last two (2) years
sixty-seven [percent] (67%) by Husband and thirty-three [percent] (33%)
by Wife.
***
134. The following represents the parties’ marital estate on the date of
filing:
ASSET VALUE
***
Coins—Gold and Silver (Disputed) Unknown
Coins—Ancient Coins (Disputed) Unknown
***
TOTAL [of valued assets] $234,607.32
***
147. Wife asserts that an auction is the fairest and best way to recognize
the highest value for the coins . . . .
148. It is not clear to the Arbitrator . . . why Husband should be
compelled to auction his share of the coins if he does not desire to do so.
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***
154. . . . In assessing attorney fees and litigation expenses in a
dissolution of marriage proceeding, the trial court should consider the
resources of the parties, their economic condition, the ability of the parties
to engage in gainful employment and to earn adequate income, and such
other factors that bear on the reasonableness of the award. Scott v. State,
668 N.E.2d 691, 709 (Ind. [Ct.] App. 1996).
155. Evidence revealed that Husband told Wife that she could receive
free legal services from the Hyatt Legal Plan, a benefit that Husband
received by virtue of his union benefits . . . .
156. Wife testified that Husband informed her that she could meet with
his attorney and such attorney could be her lawyer also.
157. Husband was subpoenaed to produce the Hyatt Legal Plan which
allegedly provided that two (2) parties to a divorce could have two (2)
separate attorneys to be paid by the same plan. No evidence was produced
by Husband to support his contention that the Hyatt Legal Plan would
provide legal services for Wife.
158. For a portion of these proceedings, Husband’s attorney fees were
covered by the Hyatt Legal Plan, as his attorney is a member of such Plan.
The Plan provided Husband with an hourly rate of [$100,] which rate is one
and one-half (1 ½) times less than the standard rate in the legal community.
As such, Husband has benefited greatly from his employment benefit.
***
160. Husband’s Attorney Fee Affidavit states that Husband has incurred
Attorney Fees in the aggregate sum of [$33,771.50] . . . . Husband has
been billed at [$100] per hour and the first [$12,000] of fees were paid by
the Hyatt Legal Plan.
161. Wife secured independent counsel, C. Neil Hayes, Esq., and has been
caused to incur debt with her father for the payment of Mr. Hayes’ services.
162. For each payment made toward Wife’s attorney fees such was
derived from borrowed monies from Paul and Dona Dawson of Allen Park,
Michigan. All borrowings were secured with a Promissory Note from Wife
to Paul and Dona Dawson.
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163. Wife is one of four children and is expected to repay the money that
she borrowed in order to permit fairness to her siblings and her parents as
testified [to] by Wife and Paul Dawson . . . . There has been no evidence
produced to the contrary.
164. Additionally, Wife borrowed money from her parents . . . to secure
the business valuator, Gregory Green. Wife paid the following litigation
expenses . . . [which totaled] $5,513.90. Husband equally benefitted from
payments made to Gregory Green and Fairfield Rare Coins & Jewelry[,
which cost $582.20 and $1350, respectively]. . . .
165. Husband incurred litigation expenses of [$100] to Pegasi
Numismatics, [$50] for Recovery Coin Inventory, [$715] for Gregory
Green, [and $1,050] for Timbrook Psychological Services.
***
170. The joint philosophy of the parties was that Wife would be a stay-at-
home Wife and a Mother for [E.M.], a life not contemplating the furthering
of her formal education. At the same time, the evidence reveals that the
Husband pursued his vocation at Navistar, provided tutorial services for
students in math, secured a Graduate Certificate in Statistics and furthered
his formal education earning a Master’s Degree in Mathematics . . . .
171. Wife has been unemployed outside the household for many years,
and she continued [to be] so unemployed during the separation.
172. In this proceeding, both parties have complained that the other’s
conduct, and lack of cooperation, has caused an increase in the overall
expense in this proceeding. The Arbitrator has taken due notice of both of
the part[ies’] contentions.
173. The case before the Arbitrator is one of procedural[] complexity and
substantive difficulty. A unique issue has arisen due to Husband’s 5th
Amendment objections and other discovery disputes arising from
Husband’s relationship with his former employer.
174. The actual ratio of earnings is [100%] Husband and [0%] Wife.
Even if income is imputed to Wife, there is a dramatic disparity in the
parties’ incomes. It is also true that Wife has not earned any income for
many years and apparently Husband did not object to this course of
conduct.
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175. Husband has paid nothing of Wife’s Attorney Fees and Cost of
litigation and had no outstanding debt in relation thereto at the time of
Arbitration.
176. The Arbitrator has considered the resources of the parties, the
parties’ economic condition, the ability of the parties to engage in gainful
employment and to earn an adequate income and other such factors that
bear on reasonableness of the award.
177. After considering all relevant factors, the Arbitrator finds that the
Husband should be ordered to pay [$95,000] of Wife’s attorney fees . . . .
178. Wife also incurred cost[s] for which Husband benefitted from as set
forth herein. Husband shall reimburse Wife [60%] of the following for
which Husband derived direct benefit: [$582] Gregory Green; [$1,350]
Fairfield Rare Coins & Jewelry Appraisal; and [$1,800 in the Arbitrator’s
expenses] within [30] days of the date of this Decree of Dissolution.
179. Wife shall reimburse to Husband [40%] of his litigation expenses
[listed in paragraph 165].
***
198. Husband owes Wife a cash equalization of [$23,965.05, which] shall
be paid before June 30, 2014[, or in about 100 days].
Appellant’s App. at 20, 23, 27-29, 34, 36-38, 40.
The arbitrator then distributed marital assets 60% to 40% in Wife’s favor, as the
arbitrator had done with respect to certain miscellaneous litigation expenses quoted
above. Thus, the arbitrator awarded Husband about $93,843 in the valued marital assets.
And the arbitrator further directed Husband to “replenish . . . [$51,000] . . . in the parties’
bank accounts.”1 Id. at 45. This appeal ensued.
1
There are no findings to suggest that Husband engaged in any misconduct, although the
arbitrator did find that each party had been especially litigious.
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DISCUSSION AND DECISION
Attorney’s Fees
On appeal, Husband challenges the arbitrator’s findings and conclusions that he
pay $95,000 in Wife’s attorney’s fees. Pursuant to the Family Law Arbitration Act, an
appeal may be taken from the court’s judgment on an arbitrator’s findings and
conclusions “as may be taken after a judgment in a civil action.” I.C. § 34-57-5-11. We
review the arbitrator’s findings and conclusions accordingly.
According to the Indiana Supreme Court, where the judgment on attorney’s fees is
based on findings and conclusions, “the standard of review under [Indiana Trial Rule]
52(A) . . . applies.” Quillen v. Quillen, 671 N.E.2d 98, 103 (Ind. 1996). Trial Rule 52(A)
prohibits a reviewing court on appeal from setting aside the trial court’s
judgment “unless clearly erroneous.” The court on appeal is further
required to give “due regard . . . to the opportunity of the trial court to judge
the credibility of the witnesses.” When a trial court has made special
findings of fact, as it did in this case, its judgment is clearly erroneous only
if (i) its findings of fact do not support its conclusions of law or (ii) its
conclusions of law do not support its judgment. Findings are clearly
erroneous only when the record contains no facts to support them either
directly or by inference.
Id. at 102 (citation omitted). Findings are also clearly erroneous “if they are insufficient
to disclose a valid basis for the legal result reached in judgment,” Fumo v. Med. Group of
Mich. City, Inc., 590 N.E.2d 1103, 1108 (Ind. Ct. App. 1992), trans. denied, or if they are
“facially inconsistent” such that they cannot support the judgment, Ozug v. Ozug, 4
N.E.3d 827, 830-31 (Ind. Ct. App. 2014), trans. denied.
Our supreme court has added:
where the trial court finding at issue is the award of attorney[’s] fees in a
dissolution proceeding:
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Trial courts enjoy broad discretion in awarding allowances
for attorney[’s] fees. . . . Reversal is proper only where the
trial court’s award is clearly against the logic and effect of the
facts and circumstances before the court. . . . In assessing
attorney’s fees the court may consider such factors as the
amount of assets awarded to the parties, the relative earning
ability of the parties, and which party initiated the action.
Quillen, 671 N.E.2d at 103 (quoting Selke v. Selke, 600 N.E.2d 100, 102 (Ind. 1992)).
We hold that the arbitrator’s findings are clearly erroneous because they do not
demonstrate Husband’s ability to pay the fee assessed against him. When determining
whether to award attorney’s fees, the other party’s ability to pay is a factor to be
considered. See, e.g., Carrasco v. Grubb, 824 N.E.2d 705, 712 (Ind. Ct. App. 2005),
trans. denied. But there are no findings here that demonstrate that the arbitrator
considered that factor. To the contrary, the arbitrator expressly found that Husband’s
annual income is $80,000; she directed Husband to pay $17,735 in his child support
arrearage “forthwith,” Appellant’s App. at 29; she directed him to pay $23,965.05 as a
cash equalization payment within 100 days of the dissolution order; and she directed him
to pay $51,000 to “replenish . . . the parties’ bank accounts.” Id. at 45. Moreover, the
$95,000 award is about $1,000 more than Husband’s 40% of the valued portion of the
marital estate. If anything, the arbitrator’s findings seriously call into doubt Husband’s
ability to pay another $95,000 to Wife.
In response, Wife asserts that unvalued marital assets, namely, certain coins,
demonstrate Husband’s ability to pay the fee award. In support of this argument, Wife
relies on evidence she submitted to the arbitrator regarding the value of those assets. But,
despite that evidence, the arbitrator expressly found that the coins had an “[u]nknown”
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value. Id. at 34. Moreover, the arbitrator expressly found that Husband should not “be
compelled to auction his share of the coins . . . .” Id. at 35. As such, we are in no
position either to speculate on a value for the coins or to say that the arbitrator meant for
Husband to sell or otherwise collateralize them. And, at best, Wife’s evidence regarding
the value of the coins would make the arbitrator’s findings irrational in that the arbitrator
would have found that the coins had an unknown value and then relied on that unknown
value to assess fees against Husband.
Neither do the arbitrator’s findings regarding Husband’s mistaken belief about
whether his union agreement would pay for Wife’s attorney, or Wife’s payment
agreement with her parents, which enabled her to obtain the attorney of her choice,
inform this court of a basis for the arbitrator’s conclusion that Husband should pay
Wife’s fees. There are no findings that Husband acted in bad faith or in any way more
inappropriately than Wife throughout the dissolution process. As such, these findings do
not support the arbitrator’s conclusion.
Finally, in support of the fee award Wife lists a number of things the arbitrator
“could” have relied on. Appellee’s Br. at 25-27. But, while the fact-finder “is not
required to give reasons for its determination” on attorney’s fees, Connolly v. Connolly,
952 N.E.2d 203, 208 (Ind. Ct. App. 2011), neither is this court obliged to rationalize the
judgment or to disregard the actual findings entered. And it is not this court’s place to
explain to the fact-finder what the fact-finder should have explained to this court in the
first instance. Here, again, the arbitrator’s findings of fact do not demonstrate that
Husband had the ability to pay Wife’s attorney’s fees.
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Thus, the judgment on this issue is clearly erroneous. The arbitrator’s findings of
fact do not disclose a valid basis for the legal result reached in that they do not explain
whether Husband has the ability to pay Wife’s attorney’s fees.2 The court’s judgment
that Husband pay $95,000 to Wife for her attorney’s fees is reversed, and we remand
with instructions that the court enter a reasonable award of attorney’s fees to Wife in a
manner that is not inconsistent with this opinion.
Cross-Appeal & Appellate Rule 66(E)
Wife raises two arguments on cross-appeal. First, Wife asserts that the arbitrator’s
findings and conclusions are clearly erroneous because the arbitrator “failed to rule on
Husband’s Notice of Intent to Relocate and Wife’s Motion to Prevent Relocation.”
Appellee’s Br. at 35. In particular, Wife objected to Husband’s notice of intent to
relocate to North Carolina on the grounds that the notice was defective. Without ruling
on Wife’s objections, the arbitrator entered findings and conclusions that establish
parenting time with Husband in North Carolina. Thus, the arbitrator at least implicitly
rejected Wife’s objections, and Wife does not assert any other grounds that challenge the
arbitrator’s findings and conclusions on Husband’s living arrangements in North
Carolina. Accordingly, Wife’s first issue in her cross-appeal is without merit.
Wife also argues on cross-appeal that the arbitrator erroneously “order[ed] the
parties to agree upon the means of transportation” for E.M. between parenting times. Id.
2
We need not consider Husband’s alternative argument that the $95,000 assessment is
unreasonable, but we note that the arbitrator found that a reasonable hourly rate for a local attorney would
have been $250. It is not at all clear to this court whether or how the arbitrator used that hourly rate, or
any other information, to determine that the award for attorney’s fees in this case was a reasonable award.
See Gerstbauer v. Styers, 898 N.E.2d 369, 381 (Ind. Ct. App. 2008) (“Our charge is to determine the
objective reasonableness of attorneys’ fees, which requires an examination of the facts and circumstances
that gave rise to the fees.”) (citing Ind. Professional Conduct Rule 1.5(a)).
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But Wife cites no authority that requires our courts or their officers to micro-manage
parents’ lives. It is clear from the order that the arbitrator expects the parents to act like
adults, figure out reasonable means of transportation, and otherwise act in E.M.’s best
interests. If one side is unable to do so, the other side has a remedy through contempt
procedures. We will not reverse on this issue.
Finally, we summarily reject each party’s request for appellate attorney’s fees
under Indiana Appellate Rule 66(E). Each party is instructed to pay his or her own
appellate attorney’s fees. However, we hold that Husband has the right to recover his
appellate costs pursuant to Appellate Rule 67(C).3
Conclusion
In sum, the arbitrator’s order that Husband pay $95,000 to Wife for her attorney’s
fees is clearly erroneous. As such, we reverse and remand on that issue. We reject
Wife’s arguments on cross-appeal as well as each side’s request for appellate attorney’s
fees under Appellate Rule 66(E).
Reversed and remanded with instructions.
BAILEY, J., and PYLE, J., concur.
3
We note that Husband, both as the appellant and as the cross-appellee, has been wholly
successful in this appeal. See Ind. Appellate Rule 67(C).
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