Court: Court of Civil Appeals of Alabama; November 20, 2014; Alabama; State Appellate Court
Joseph Edward McCarron III appeals a judgment that granted divorce from Jerry Ann McCarron, focusing on issues of property division, alimony, and attorney's fees awarded to the wife. The divorce proceedings began with the wife filing a complaint on July 2, 2012, followed by the husband’s counterclaim on August 14, 2012. A trial concluded with a judgment on November 25, 2013, citing the husband’s adultery as grounds for divorce, along with the division of marital property and periodic alimony to the wife. Postjudgment motions were filed by both parties, leading to amendments and the husband’s notice of appeal on March 18, 2014.
On appeal, the husband contends the trial court erred in its property division and alimony award. The court must first classify what constitutes the marital estate before dividing property, as per Ala.Code 1975, 30-2-51(a). The trial court identified several joint real estate properties, including the marital home and a house in Orange Beach, alongside personal property such as the husband's 49% stake in McCarron Insurance Group, a joint checking account, furniture, and a boat. The husband disputes the inclusion of the Orange Beach house, claiming it was his grandparents' property and acquired late in the marriage. However, the court found that the husband had purchased the majority interest during the marriage using marital funds, and both spouses contributed to the property’s upkeep and mortgage refinancing. Thus, the court upheld the classification of the Orange Beach house as a marital asset, supported by precedents clarifying that property acquired during marriage with marital funds is considered marital property, even if inherited.
The husband contests the trial court's decision to include more than 50% of his ownership interest in MIG within the marital estate, asserting that it qualifies as a "retirement benefit" under Ala.Code 1975, 30-2-51(b)(1). This code permits the inclusion of either spouse's current or future retirement benefits in the marital estate, contingent upon certain conditions. Both parties indicated reliance on this ownership interest for retirement support. However, the trial court's ruling indicated the $400,000 awarded to the wife was for property division in consideration of her retirement, which does not automatically classify the husband's interest as a retirement benefit. The court referenced its earlier ruling in Brasili v. Brasili, which defined retirement benefits strictly as monetary benefits accessible only upon retirement, excluding income-generating ownership interests in businesses. The husband's claim that his minority interest in a closely held corporation should not be considered marital property because it is not titled in the wife’s name and lacks her material contribution is unsupported by relevant legal authority, as cited cases did not bolster his position. Additionally, the husband argued against including the wife’s credit-card debt in the marital estate, claiming it was largely incurred post-separation, but evidence presented indicated most charges occurred during the marriage. The trial court accounted for certain charges related to the wife's attorney fees, granting the husband a credit against his attorney fee obligations.
The trial court did not err in its classification of the Orange Beach house and the husband’s ownership interest in MIG as marital property, nor in classifying the wife's credit-card debt as marital debt due to lack of evidence on separate charges incurred during separation. The husband did not contest the valuation of the marital property but argued against the division and distribution of that property. He claimed inconsistencies in the trial court's judgment regarding his interest in MIG and the wife's $400,000 property settlement, asserting they conflicted. The court found that the judgment was clear, awarding the property settlement in lieu of an "in-kind" transfer.
Regarding the Fairhope house, the trial court mandated the husband to pay $30,000 for necessary repairs, despite his claim that $27,500 previously spent on renovations should count as credit against this obligation. The court, however, determined that prior expenditures did not apply to the repair costs. The husband argued the property division was inequitable, but he did not specifically claim the wife received an unjustly disproportionate share of the marital estate. The court upheld the trial court’s decisions on classification, valuation, and division of property, rejecting the husband's arguments while noting that a mechanism for property distribution may need reconsideration.
The trial court awarded the wife $10,000 per month in periodic alimony, which the husband contested, arguing she failed to demonstrate a need for it. According to Alabama Code 1975, § 30-2-51(a), a spouse without a sufficient separate estate may receive alimony at the judge's discretion, considering the value of the estate and the spouse's condition. To qualify for alimony, a spouse must show an inability to maintain the marital standard of living independently. Establishing this need involves demonstrating the couple's standard of living during the marriage and the financial costs associated with it. While an itemized budget is not legally required, sufficient evidence must be presented for the court to infer the costs of maintaining that lifestyle.
In this case, evidence indicated the couple enjoyed an upper-middle-class lifestyle, owning two substantial homes, a rental property, maintaining over $50,000 in a checking account, and engaging in various leisure activities. The husband maintained a similar lifestyle during separation, making significant purchases and taking vacations. He provided evidence of the costs associated with their previous standard of living, including monthly expenses for housing, property taxes, utilities, and other living expenses amounting to approximately $15,000 per month. Thus, the trial court had a reasonable basis to infer the wife's need for alimony based on the established lifestyle and expenses.
The husband asserts that the couple's improved lifestyle occurred only in the last nine years of their 23-year marriage. The trial court's periodic-alimony award could justifiably be based on the later standard of living, considering that a couple's lifestyle can evolve as their careers progress. The court should evaluate the marital standard of living based on the period leading to the divorce, reflecting how the couple would have lived had they remained married. Relevant case law indicates that a spouse must demonstrate financial inability to maintain the established standard of living independently. The wife, aged 63, had primarily worked as an insurance agent, earning up to $90,000 annually, but had largely retired before the divorce, working only part-time. The husband contends that her earning capacity should factor into the alimony calculation. A trial court must assess a spouse's current circumstances—age, health, and employment prospects—rather than solely past earnings. Evidence presented showed the wife had health issues, including chronic obstructive pulmonary disease, but believed she could return to work if necessary. She argued against having to alter her lifestyle due to the divorce, especially given the husband was financially supporting his unemployed partner. Courts can consider a spouse's retirement status when determining alimony needs, maintaining that periodic alimony aims to preserve the economic status quo. The wife's retirement was described as a planned decision made in good faith, unrelated to the divorce, aligning with precedent that addresses the implications of voluntary retirement on alimony.
The trial court found that the wife's good-faith retirement precluded her from earning future wages, indicating that reducing her periodic alimony would alter, rather than preserve, the status quo. It noted that in determining periodic alimony, it must consider if one party's greater fault led to the marriage's end. Since the husband sought the divorce to pursue another relationship, the court reasonably concluded that the wife should not be compelled to work following the abrupt termination of the marriage. The wife receives about $1,600 monthly in residual commissions from her former insurance sales, which she expects to decline. This income covers basic expenses for the Fairhope house but is insufficient for the higher costs associated with the Orange Beach house, as well as other ordinary living expenses. The wife demonstrated a need for periodic alimony by showing she could only partially meet the financial demands of their former marital standard of living.
Regarding the husband’s ability to pay alimony, the trial court should typically start with his net income for evaluations. The husband claimed a net income of $15,000 per month; however, evidence indicated a gross annual income of approximately $440,000, translating to a gross monthly income over $30,000. The trial court did not specify the husband's net income but should clarify this point for meaningful appellate review.
In assessing the responding spouse's ability to pay, the trial court must consider all financial obligations stemming from the divorce judgment, as established in Shewbart, 64 So.3d at 1088. The judgment mandated the husband to pay the wife $400,000 for his ownership interest in MIG, over $35,000 for credit-card debt, $30,000 for home repairs, $16,000 for their checking account, and $10,000 for furniture, all due within 30 days. Evidence indicated that the couple had no liquid assets and their real property was heavily indebted. The trial court recognized the husband's probable inability to pay the $400,000 lump sum by reserving judgment on the payment method should he fail to do so within 90 days of the original judgment.
The husband’s lack of liquid assets and the encumbrance of his real estate limited his ability to secure loans. He claimed he could potentially obtain a personal loan of $120,000, but the wife did not provide evidence to counter his assertion of insufficient funds for the property settlement. The court noted that awarding a lump sum payment that exceeds the payor's liquid assets could be an abuse of discretion, as a monetary award is only feasible if sufficient resources exist within the marital estate. Although it is permissible to award more than the payor's liquid assets if they can sell or refinance, this approach has drawbacks, such as capital gains taxes and reduced property value under duress.
The trial court's decision to grant a lump sum despite rejecting an in-kind division of the husband's interest in MIG was deemed impractical. An alternative, equitable solution would involve deferring the property settlement payment over time, akin to the installment plan approved in Wells v. Wells, 428 So.2d 88 (Ala.Civ.App.1983), which allowed a wife to receive payments over 11 years without forcing the husband to liquidate his business. This method would preserve the business and ensure future support for the wife and child.
The Wyoming Supreme Court in Bailey determined that a lump-sum payment of $323,081.50 for the wife's interest in the husband’s closely held corporations was impractical, suggesting a payment schedule instead to avoid unnecessary financial strain on the husband. Consequently, the court reversed the trial court's judgment regarding the payment mechanism and remanded the case for the establishment of a reasonable installment plan. This decision acknowledges that such a plan could influence the husband's income available for periodic alimony and his own living expenses. The court emphasized that the trial court must consider the husband's financial capacity to pay both the property settlement and periodic alimony, taking into account the impact on the parties' former lifestyle and ensuring that the alimony does not lead to an unconscionable financial disparity, even in cases of marital misconduct. Under Alabama law, the misconduct of either spouse can influence alimony amounts, but obligations must remain within the obligor spouse's ability to pay consistently. The trial court is instructed to assess the husband's monthly net income to determine an appropriate portion for fulfilling the monetary obligations without imposing undue hardship. While the court does not require modifications to the individual awards, it allows for adjustments to ensure a fair balance in providing the wife with her equitable share while considering the husband's financial situation.
The trial court issued a final judgment on November 25, 2013, and subsequently amended it on February 6, 2014. Following the amendment, the husband sought a supersedeas bond to suspend enforcement of the divorce judgment, which the wife opposed. On February 21, 2014, the trial court approved the bond, contingent upon the husband's agreement to reinstate a prior pendente lite order requiring him to pay the wife's credit card expenses during the appeal. The husband contested the court's jurisdiction for this order, claiming it had issued a final judgment. However, legal precedent allows a trial court to issue temporary support orders during an appeal as these are considered collateral matters, distinct from the divorce judgment being appealed. Thus, the court acted within its jurisdiction.
Regarding attorney's fees, the divorce judgment mandated the husband to cover the wife's fees, allowing for credits based on any payments he made towards her credit card debt linked to those fees. The court found the judgment's wording clear, affirming the attorney fee award without error.
The court affirmed the trial court's decision to grant temporary support pending appeal and the award of attorney's fees but reversed the requirement for the husband to pay a significant property settlement in a lump sum. The court also reversed the $10,000 monthly periodic alimony award, directing the trial court to reconsider these amounts together, given their interrelation. The case was remanded for further proceedings, including additional hearings if necessary. The court noted unresolved contempt motions filed by the wife, suggesting they may have been addressed in untranscribed pretrial hearings or abandoned during the trial.
The amended divorce judgment stipulates that if the Orange Beach house sells within one year, the wife will receive either $120,000 or 60% of the net sale proceeds, whichever is lesser. If the house does not sell within that timeframe, she will receive $120,000. The husband challenges two awards of $16,000 and $10,000 but fails to provide legal arguments to support this request, thus the issue is not considered. The judgment remains final as the trial court did not reserve the right to alter the property division but maintained jurisdiction solely for enforcement purposes. The judgment's finality is contrasted with other cases where modification rights were explicitly reserved. Additionally, the husband argues that the trial court incorrectly ordered him to pay $15,635 in business appraiser fees, but he does not cite legal authority to substantiate this claim, leading to its dismissal under Rule 28(a)(10), Ala. R.App. P.
