Pathetic, isn’t it, when a spouse has to appeal a judgment of divorce granted in 1993 to the court of appeals three times to get her fair share of the marital assets and the property division in the case drags on for thirteen years – and longer! In a decision yesterday, the Michigan COA once again was forced to remand to the trial court for redetermination consistent with its decision.
In Cipriano v Cipriano, Docket No. 259818 (Cipriano III), decided by the Michigan Court of Appeals on July 25, 2006, the court made some important rulings with regard to separate property claims.
Husband had claimed his interest in a family business as separate property, and the trial court had agreed. Judgment was entered in June 1993, and Wife appealed of right. In an unpublished opinion per curiam, the COA vacated this portion of the T/C’s decision and remanded for reconsideration. Cipriano I, Docket No 171878, 174026 (July 5, 1996). The wife was originally awarded 55% of the marital assets by the trial court; this award was affirmed by the panel in Cipriano I. On remand, Husband’s interest in the family business was found by the T/C to be his separate property. Wife was not, therefore, awarded a share of that asset.
Wife appealed again. In this second appeal, the COA reversed the T/C’s determination that Wife had not contributed to the acquisition, improvement, or accumulation of this asset during the marriage. In an unpublished, per curiam opinion, the COA remanded, ordering the T/C to determine Wife’s equitable share of the increase in value of this asset during the marriage. Cipriano II, issued December 27, 2002 (Docket No. 233215).
On remand, the trial court determined that the value of Husband’s interest in the family business increased by $882,100 during the marriage (1980 to June 1993), and awarded Wife 50 percent of this value. The court awarded Wife her share of this asset in stock rather than cash. Wife appealed as of right.
On appeal, Wife argued that the COA decision in Cipriano I affirming the T/C’s 55/45 division of the marital assets in her favor is the law of the case and, therefore, on remand, the T/C was required to award her a 55-percent share of the increased value of Husband’s interest in the family business, rather than only a 50-percent share. The panel in Cipriano III agreed.
Wife also claimed that the T/C erred by awarding her share of the interest in the family business in the form of stock in the business rather than as an equivalent cash award. Citing Olson v Olson, 256 Mich App 619, 624-626 (2003) and McDougal v McDougal, 451 Mich 80, 91 n 9 (1996), the panel in Cipriano III agreed that a cash award was required. The rationale for this decision is that multiple problems can arise when stock in a closely held corporation is divided among divorcing parties. Thus the COA reversed the trial court’s awarded to Wife of an equity interest in the business, holding that she was entitled to a cash award.
The COA then also agreed with Wife that she is entitled to interest on her cash award. The COA noted that Wife is entitled to 55% of the increase in value of the business during the marriage (between 1980 and the time this matter was originally litigated in June 1993). However, Husband has continued to own and control this asset and has received the economic benefits from it between 1993 and 2004 (the date of the decision on remand in Cipriano II). The COA stated that “in order to achieve a fair and equitable division of this asset, Wife is entitled to interest on her share of this asset between 1993 to 2004.” It is not clear to me why the interest would not continue to the time of actual payment of the cash equivalent. However, during the last remand, Wife had submitted a proposal and calculation of interest dated December 17, 2004.
The COA then remanded to the T/C with directions as follows: “On remand, the trial court shall award Wife interest on her share of this asset, $441,050, to be calculated using the variable rates of interest proposed by Wife, which we find to be fair and equitable.”
In my view, there are two errors in this last portion of the COA opinion. First, to be fair and equitable, the interest calculation should be made on Wife’s share from the date of entry of judgment in 1993 to the date of distribution. Second, the COA actually stated in its opinion that Wife was entitled to 55% of the asset, but then directed the T/C to base the interest on 50% of the value of the asset. Perhaps appellate counsel for Wife will file a motion for reconsideration of these points.
Read Cipriano III, decided on July 25, 2006 here.
Technoarti tags: divorce, property division, property distribution, separate property
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