Dargie v. Dargie

DANA, J.,

dissenting.

[¶ 34] I must respectfully dissent.

[¶ 35] In its distribution of the marital property, it is not clear that the court considered the extent of the debt it ordered Roger to pay. When that debt is considered, the magnitude of the allocation to Deborah is revealed. Although the court was aware that its allocation was disproportionate and although it provided a rationale for a disproportionate allocation, because of the manner of its presentation, we and the parties are left to speculate as to whether the court fully understood the ramifications of its order. My colleagues give the trial court the benefit of the doubt. We should not have to guess. Finally, in its award of child and spousal support and attorney fees, the court appeared to consider only the parties’ salaries and failed to consider their relative net worths or other income.

I. PRESENTATION

[¶ 36] Although the trial court’s thirty-five page opinion is extensive, it is not clear that it appreciated that it awarded Deborah approximately 85% of the marital net worth. Even if the life insurance proceeds are excluded, Deborah received over 70% of the remaining marital net worth. It would be helpful to the parties and to us in performing our appellate function if trial courts would set forth in table form the marital and non-marital assets awarded and the debts assigned to each party in a manner such as the following:

DISTRIBUTION OF NON-MARITAL ASSET TO DEBORAH

Eight shares in stock of family business 3,000⁶ 3,000

DISTRIBUTION OF MARITAL ASSETS AND MARITAL DEBTS TO DEBORAH⁷

Asset Net Asset Value Debt Owed Value

Real estate 118,000 (52,000) 66,000

Value of Deborah’s interest in Roger’s business (note @ 7%) 56,000 56,000

Life insurance proceeds 150,000 150,000

Lease of 1998 Ford Explorer ?⁸ ?

Jewelry 2,500 2,500

Home furnishings 7,000 7,000

Savings Bank account nos. 1 & 2 1,708 1,708

IRA account 6,800 6,800

35 mm camera and video cameras 1,200 1,200

Discover credit card debt (1,835) (1,835)

289,373 TOTAL MARITAL NET WORTH

AND MARITAL DEBTS TO ROGER DISTRIBUTION OF MARITAL ASSETS

Asset Net Asset Value Debt Owed Value

Interest in Safe Approach, Inc. 112,000 (56,000) 56,000

1988 Century cabin cruiser 29,000 (29,252) (252)

Condo dock slip 17,000 17,000

1969 GT OPEL 6,200 a, 500) 1,700

1970 Elan snowmobile 700 700

Morgan promissory note (4/14/98) 10,000 10,000

Power tools 7,000 7,000

Violin and home furnishings 3,000 3,000

IRA account no. 1 5,200 5,200

IRA account no. 2 3,400 3,400

Reimburse Katie’s Galaxy fund (5,700) (5,700)

Home equity loan (29,810) (29,810)

Condominium fees (3,660) (3,660)

Personal loan (5.500) (5.500)

VISA credit card debt (Í, 500) (4.500)

Loan from Andre Drouin (1.500) (1.500)

TOTAL MARITAL NET WORTH 53,078

[¶ 37] A court must take into account “[t]he value of the property set apart to each spouse” as part of its disposition of the property. 19-A M.R.S.A. § 953(1)(B) (1998). Here, the overall distribution of the assets is unbalanced, which in some circumstances amounts to an abuse of discretion. See Beattie v. Beattie, 650 A.2d 950, 952 (Me.1994) (holding that, while certain elements of the divorce judgment “may be supportable independently, the evidence [did] not support the cumulative effect of the judgment”) (emphasis added). The court’s judgment does not demonstrate that it understood the extent of its unequal division of marital property.

II. CHILD SUPPORT

[¶ 38] The court’s award of child support is based on the assumption that Deborah’s salary is her “gross income.” By ignoring Deborah’s net worth (especially the $150,000 from the insurance policy and Roger’s promissory note in the amount of $56,000 with interest accruing at 7%), the court inflated Roger’s support obligation. According to the child support guidelines, “[g]ross income includes income from an ongoing source, including, but not limited to ... interest .... ” 19-A M.R.S.A. § 2001(5) (1998). Two hundred thousand dollars in cash and notes is certainly a source of ongoing income. A court should consider all of Deborah’s “gross income” before making its child support determination.

III. SPOUSAL SUPPORT

[¶ 39] With respect to Deborah’s need for support, the court did not appear to consider any income from the proceeds of the $150,000 life insurance policy and the 7% return on Roger’s $56,000 note. The Court seeks to justify this deficiency by characterizing the income from the 7% note and the $150,000 in cash as speculative because Roger may not pay the note and “[conceivably, Deborah might use the insurance proceeds to satisfy all her outstanding debt. In this scenario there would be no additional income to impute to Deborah.” Supra, Court’s opinion at ¶ 24. The Court invites Roger to return to court when he begins paying his note to Deborah or learns how Deborah invests her wealth. The Court fails to mention the transactional costs (primarily attorney fees) associated with doing so.

[¶ 40] Pursuant to the statute in effect at the time of the judgment, the court must consider “[t]he income history and income potential of each party.” 19-A M.R.S.A. § 951(i)(E) (1998), repealed by P.L.1999, ch. 634, § 2. Determining the income generating capacity of cash and a 7% note is infinitely less speculative than the trial court’s valuing of Roger’s closely held company or its projecting of Roger’s prospects for a bonus.

[¶41] When, as here, the court has ordered one party to pay the other a certain amount in the form of an interest-bearing note,⁹ the court should take into account the interest income and interest expense. The income is not speculative, but has instead been ordered by the court and Roger may be held in contempt for his failure to pay that interest. See City of Rockland v. Winchenbaugh, 667 A.2d 602, 604 (Me.1995) (“Civil contempt is used to secure obedience to court orders. It is a coercive tool, available to parties who seek to enforce a previously obtained judgment.”) (citation omitted).

[¶ 42] The $150,000 in life insurance proceeds will similarly provide a return regardless of how Deborah invests the money. Whether she places it in a money market account or invests it in her father’s business, she can be expected to receive some return on her investment. For in'stance, if she places the money in a bank certificate of deposit at 6%, she will receive $9000 per year in income. Moreover, even if she uses a portion of the $150,000 to pay off some or all of her debts (the court assigned her approximately $54,000 in debt), she will be saving the interest that would have accrued on those debts. The court should consider the parties’ assets and liabilities before making its spousal support determination.

IV. ATTORNEY FEES

[¶ 43] The Court concludes that standing alone the trial court’s finding regarding Roger’s income justifies its decision to award attorney fees. We have said, however, that “[a]n award of attorney fees should be based on the parties’ relative capacity to absorb the costs of litigation ... and all relevant factors that serve to create an award that is fair and just under the circumstances.” Largay v. Largay, 2000 ME 108, ¶ 16, 752 A.2d 194, 198 (emphasis and internal quotation marks omitted). The court’s judgment does not indicate that it considered Roger’s relative capacity to service and retire over $140,000 in debt, to pay $6,500 in annual child support, $7,800 in annual spousal support, 100% of his litigation costs, and $4,000 of Deborah’s attorney fees.

6 . The court found that Deborah owns eight of 200 shares of the stock in the family business. Her father testified the business was worth $75,000. Without a minority discount, her proportionate interest would be worth $3,000.

7 . The court failed to provide values for the items in italics. I have used Roger’s financial affidavit to estimate values not found by the court. The question marks also indicate missing information.

8 .The balance owed on the lease was $2,035 as of July 31, 1999, according to Roger’s financial affidavit. The court did not attach a value to the leasehold interest in the vehicle.

9 . The court stated that the promissory note would "bear interest at the rate of 7% per year on the unpaid balance and shall be payable within 5 years from the date of said note which date shall [be] on or within 14 days of this judgment.”