Opinion
No. 1D19-2070
07-27-2022
Karen COLLIER, Former Wife, Appellant/Cross-Appellee, v. Stephen COLLIER, Former Husband, Appellee/Cross-Appellant.
Raymond J. Rafool and David R Hazouri of Rafool LLC, Miami, for Appellant/Cross-Appellee. Linda A. Bailey, Tallahassee, for Appellee/Cross-Appellant.
Raymond J. Rafool and David R Hazouri of Rafool LLC, Miami, for Appellant/Cross-Appellee.
Linda A. Bailey, Tallahassee, for Appellee/Cross-Appellant.
Tanenbaum, J.
Stephen and Karen Collier (hereinafter the "former husband" and the "former wife") each challenge aspects of a final judgment of dissolution relating to the equitable distribution of their marital estate. We affirm the judgment in all respects but write to address one issue raised by the former wife.
The former wife contends that the trial court erroneously attributed to her, for the purpose of calculating the parties’ equitable shares of the marital estate, the entire value of an irrevocable trust that she funded with marital assets after the dissolution petition was filed. The effect of this was to add back to the value of the marital estate the millions of dollars in assets that she had sent into the irrevocable trust during the dissolution proceedings and to put that value on the former wife's side of the equitable distribution ledger. Doing so increased both the value of the marital estate and the imbalance between the value of assets distributed to the former husband and the value distributed to the former wife. As a result of this step and other attributions that the former wife does not challenge, the trial court ordered an equalizer payment from the former wife to the former husband in the amount of approximately $1.92 million.
We approach our review of the trial court's distribution with significant deference. "Dissolution proceedings present a trial judge with the difficult problem of apportioning assets acquired by the parties and providing necessary support." Canakaris v. Canakaris , 382 So. 2d 1197, 1202 (Fla. 1980). The trial judge, then, has "broad discretionary authority to do equity between the parties." Id. They have this discretion "because it is impossible to establish strict rules of law for every conceivable situation which could arise in the course of a domestic relation proceeding." Id. In a complicated equity proceeding like the one in this case, the "trial judge can ordinarily best determine what is appropriate and just because only [the judge] can personally observe the participants and events of the trial." Id. Before we get to the trial court's exercise of discretion in this case, though, we must determine whether the court applied the correct rule of law, a separate question. See id. (distinguishing between "an incorrect application of an existing rule of law and an abuse of discretion"). A failure "to apply the correct legal rule" makes the court action "erroneous as a matter of law ," rather than an abuse of discretion. Id. Let us then look at the applicable statutory provision.
In a dissolution proceeding, the trial court must "set apart to each spouse that spouse's nonmarital assets and liabilities" and then determine how it will distribute the spouses’ marital assets and liabilities between them. § 61.075(1), Fla. Stat. (2019). The court "must begin with the premise that the distribution should be equal." Id. That, however, does not mean the final distribution must be equal. If the trial court makes an "unequal distribution," there must be "a justification" for doing so "based on all relevant factors." Id. The statute enumerates nine specific factors. See id. (a)–(i). It also allows the court to consider "[a]ny other factors necessary to do equity and justice between the parties." Id. (j). In making the final distribution, the court clearly understood the applicable law and correctly applied it. For instance, the court's order identifies and applies these factors based on the evidence presented in the case and makes the required findings where appropriate. Cf. id. (3) (requiring distributions to "be supported by factual findings in the judgment or order based on competent substantial evidence with reference to the factors enumerated in subsection (1)," and specifying the nature and type of findings of fact that must be set out).
Much of the former wife's appeal, however, zeroes in on a point of controversy before the trial court regarding the trust funds. The trial court had to confront whether to assign to the former wife—as a marital asset—the millions that she transferred to trust accounts that had her maiden name as their eponym: initially, a year before she filed for divorce, to a revocable trust (the Duesenberg Trust); and then, while the divorce proceedings were ongoing and along with other marital assets, to an irrevocable trust (the Duesenberg Charitable Remainder Trust). All the assets that the former wife transferred to the irrevocable trust (from the revocable trust and elsewhere) started out as part of the marital estate; cumulatively, they were the product of the couple's work during their thirty-three years of marriage in a very successful joint veterinarian business. See id. (6)(a)1. (defining "marital assets and liabilities" to include those "incurred during marriage, individually by either spouse or jointly by them"); see also id. (7) (setting the date of filing the dissolution petition as the ordinary "cut-off date" for classifying an asset as being marital); (8) (establishing presumption in favor of an asset being classified as "marital" if it was "incurred by either spouse subsequent to the date of marriage and not specifically established as nonmarital assets"). The parties did not dispute this.
The thing about a trust, though, is that the trustee takes title to the trust property from the settlor. See O'Brien v. McMahon , 44 So. 3d 1273, 1280 (Fla. 1st DCA 2010) (citing RESTATEMENT (THIRD) OF TRUSTS § 5 cmt. c (2003)). That did not pose much of a problem for equitable distribution when the money was in the revocable trust and she was the trustee and beneficiary. See Fla. Nat'l Bank of Palm Beach Cnty. v. Genova , 460 So. 2d 895, 897 (Fla. 1984) ("By definition, then, when a settlor sets up a revocable trust, he or she has the right to recall or end the trust at any time, and thereby regain absolute ownership of the trust property."). It became much more of a problem when the former wife transferred the funds from the revocable trust to the irrevocable trust after she commenced the divorce proceedings. As the name indicates, the former wife could not dissolve the latter trust. Plus, her certified public accountant was nominated as trustee. Under the terms of the trust, the irrevocable trust would pay her as sole recipient five percent of the value of the trust every year until her death, at which point the remainder would go to a charitable foundation she created, also in her maiden name: the Duesenberg Foundation.
Her transfer of the funds from the revocable trust and other personal accounts to the irrevocable trust effectively turned the marital funds over to a third party and put them out of reach of both the spouses, but particularly beyond the control of the former husband. The question before the trial court was whether those expatriated marital funds should be counted as part of the marital estate and characterized as having been distributed to her. The court resolved that controversy by correctly looking to paragraph (1)(i), which specifies the following relevant factor as a justification for a deviation from a straight equal distribution of marital assets: "The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition." § 61.075(1)(i), Fla. Stat.
The trial court also understood, and correctly applied, the gloss this court has given the provision:
[I]n order to determine that a spouse has dissipated marital assets, the trial court must make a specific finding of intentional misconduct based on evidence showing that the marital funds were used for one party's own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown. Misconduct is not shown by mismanagement or simple squandering of marital assets in a manner of which the other spouse disapproves.
Walker v. Walker , 85 So. 3d 553, 555 (Fla. 1st DCA 2012) (citations and quotations omitted). When one spouse proves that the other engaged in this misconduct during the dissolution proceedings, "the misconduct may serve as a basis for assigning the dissipated asset to the spending spouse when calculating equitable distribution." Winder v. Winder , 152 So. 3d 836, 838–39 (Fla. 1st DCA 2014) (quoting Roth v. Roth , 973 So. 2d 580, 584 (Fla. 2d DCA 2008) ).
The trial court did precisely this with respect to the assets that the former wife transferred to the irrevocable trust, after determining that the former wife "removed such assets outside the marital estate for her sole non-marital benefit." This gets us back to whether this was an abuse of discretion. There was evidence that the parties had a marriage that was other than idyllic. The former husband had had an affair with a woman who, along with her boyfriend, extorted thousands of dollars from the husband. The former husband also struggled with drugs. This spurred the former wife to speak to a divorce lawyer for the first time and eventually to file her first petition for dissolution. She later dismissed the petition when the two attempted to reconcile. As part of their reconciliation, and to prevent future waste of marital assets by the former husband, the parties agreed that the former wife would handle their finances going forward.
After ten years of relative calm, the former husband was arrested for possession of narcotics, which he illegally took from the parties’ veterinary practice to give to the woman from that previous extortionate liaison. He spent five weeks in drug rehabilitation as part of a plea agreement. The following year, in October 2008, the former wife opened her own Edward Jones bank account. Over the ensuing two years, the account accrued over $4,000,000. In January 2009, the former husband was arrested and jailed briefly for domestic battery against the former wife. She asked that the court reduce the charges, asserting that he was a good man and that she wanted him to be able to resume his normal life. The former wife also retained a lawyer for the former husband, and he ultimately checked back into drug rehabilitation, this time for five months, as a condition of another plea deal.
In 2010, the former husband contacted the parties’ accountant with a concern that the former wife had been depositing checks into their joint account by forging his signature. He found paychecks made out to him among the former wife's mail and discovered she had been depositing these personal paychecks into their joint account without his knowledge. The former wife also made a $50,000 donation to her church, drawing on the joint account for their veterinary practice by using the husband's signature stamp, also without his knowledge.
While all of this was going on, the former wife met with an accountant and a lawyer to discuss ways both to protect the parties’ assets from theft or waste by the former husband and to minimize the impact of estate taxes. The idea to create the revocable and irrevocable trusts came out of these discussions, which the former husband was not involved in. As we already mentioned, the former wife transferred over four million dollars in marital assets into the revocable trust in her maiden name about a year before initiating the underlying dissolution case, in 2011. She filed for divorce in 2012, and while the divorce proceedings continued in the trial court, she moved those trust assets and other individually held assets to the irrevocable trust, which also was in her maiden name. She was the sole beneficiary of both trusts, and neither trust made any provision for the former husband.
The former wife's primary tack on appeal is to question how the trial court assessed these facts and the former wife's intent. The former wife claimed she set up an irrevocable charitable trust because she and the former husband had lived below their means, would never be able to spend all their money, and wanted something to survive them. She denied that the purpose was to conceal assets in anticipation of divorce. The trial court, however, looked at all the evidence and reached a different conclusion.
Our review "must fully recognize the superior vantage point of the trial judge and should apply the ‘reasonableness’ test to determine whether" there has been an abuse of discretion. Canakaris , 382 So. 2d at 1203. If reasonable people could differ over whether the trial judge made the right call on distributing the assets and liabilities, then the judge's decision "is not unreasonable and there can be no finding of an abuse of discretion." Id. To state this in the contrapositive, we can touch a trial judge's equitable distribution only if it can be said to be wholly unreasonable. See id.
Reasonableness means that reasonable people "could differ as to the propriety of the action taken by the trial court." Id. But it also means that "there is logic and justification for the result" reflected in the distribution. Id. In this respect, we also look to ensure that the trial court did not exercise its discretionary power "in accordance with whim or caprice." Id. The voluminous record points to no whim or caprice in how the trial court approached this component of the distribution. The trial court's order details how it assessed the former wife's transfers and the circumstances under which she made them. Candidly, it is hard to see how one reasonably could conclude that the former wife's transfer of millions of dollars of assets into a trust beyond the reach of both parties in the middle of a divorce proceeding—with the former wife as the only beneficiary while she is alive—was done for any marital purpose. At a minimum, reasonable minds could differ, and that is enough to bring our review to an end.
* * *
We close with an observation. The judgment on review is admirable in how thorough it is, clocking in at sixty-eight pages in length with two hundred fifty-one paragraphs’ worth of factual findings and legal conclusions. We nevertheless are duty bound to review the record, consider the parties’ legal arguments, and determine whether there is evidentiary and legal support for the trial court's final product. The parties’ marriage dissolution was a protracted proceeding in the trial court, having been heavily litigated since May 2012. That did not let up on appeal; both parties argued for reversible error. There was a dispute over whether the judgment should be stayed pending appeal, and the parties took several extensions of the brief-filing deadline. Briefing in turn did not close until August 31, 2020. We denied oral argument on September 21, 2020. The record we reviewed contains nearly sixteen thousand pages and includes over one thousand pages of transcript from the five days spent in a final evidentiary hearing. Because this case involves both an appeal and cross-appeal, the briefs collectively contain over two hundred pages.
With this as background, we undoubtedly owe the parties here at least some written explanation for our decision. In any appeal, someone is going to win, and someone is going to lose. But for both sides—and indeed, for the general public—a written opinion adds legitimacy to a mostly unseen judicial process that produces an outcome legally binding on the parties forever. Especially in a complex case like this one, a written opinion lets the parties walk away with confidence that their arguments have been fully heard and considered. This opinion ought to give added assurance to the parties that they have had their proverbial day in court and that we did not shy away from the challenge this case presented. We have done our duty and given the parties our best, which under the circumstances, took additional time.
All this said, we find no abuse of discretion in the trial court's assignment to the former wife the assets she had transferred to the irrevocable trust. We also find no merit in the other arguments advanced by the former wife on appeal and by the former husband on cross-appeal.
AFFIRMED .
B.L. Thomas, J., concurs; Makar, J., concurs in result with opinion.
MAKAR, J., concurring in result only.
Nothing about this aged appeal, filed in this Court over three years ago and pending judicial action for the better part of two years, warrants more than a per curiam affirmance due to the deferential standard of appellate review that applies to the trial court's meticulous written order equitably distributing the former couple's assets, which noted "excessive judicial resources" had been expended on this needlessly contentious marital dissolution case. Every appeal is taken seriously, but some cases—such as this one, which was painstakingly, thoughtfully, and correctly adjudicated in the trial court—are not entitled to drain scarce judicial resources excessively once again in an appeal; doing so diverts judicial labor from other pending cases and creates unnecessary delays. As such, I concur in result only to bring a close to this case.