On September 20, 2012, just two weeks after releasing its opinion in Loutts v Loutts, the Michigan Court of Appeals ordered the opinion vacated and a new opinion was released. There were three issues in Loutts: (a) Whether the trial court should award to Wife her attorney fees and cost of appraisals; (b) Whether the imputation of income to Husband of $130,000 annually rather than his actual compensation of $240,000/year and wife was appropriate or whether the trial court's imputation of income to Husband of only $130,000 was appropriate to avoid "double-dipping" since Wife was awarded one-half of the value of the business and whether imputation of $40,000 to wife was an abuse of discretion; and (c) whether the non-compete clause in the judgment was overbroad and was an abuse of discretion.
MCL 552.23(1) states that
Upon entry of a judgment of divorce or separate maintenance, if the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party and any children of the marriage who are committed to the care and custody of either party, the court may also award to either party the part of the real and personal estate of either party and spousal support out of the real and personal estate, to be paid to either party in gross or otherwise as the court considers just and reasonable, after considering the ability of either party to pay and the character and situation of the parties, and all the other circumstances of the case.
The court of appeals compared the circumstances in Loutts to two previously decided cases in which the husband was awarded his entire pension and subsequent to retirement attempted to terminate the spousal support award on the rationale that the pension was his property and should not be tapped for income to pay spousal support. In both of those cases, the court of appeals had declined "to adopt a bright-line rule with respect to 'excess' income" and had held that "courts must employ a case-by-case approach when determining whether 'double-dipping' will achieve an outcome that is just and reasonable within the meaning of MCL 552.23(1)."
The Loutts court concluded that the trial court erred by applying a bright-line test and failing to consider the specific facts and circumstances of the case. Thus, on remand the court directed the trial court to redetermine spousal support, including whether the equities and the statutory mandate in MCL 552.23(1) warranted using the value of the business for purposes of both property division and spousal support.
As to the covenant not to compete, the court of appeals held as follows:
[Under the specific facts of this case], we would uphold the noncompete restriction on the sole basis that both parties requested it. It is unfair to harbor error and use it as an appellate parachute. Again because both parties made the request; to be awarded the same company and issue a noncompete restriction against the other spouse, we uphold the noncompete restriction in this case.
The Concurring opinion addressed the issue of the covenant not to compete at length.
See below for the new opinion and for additional resources.