Opinion
No. 11–P–1521.
2012-10-1
T.D. v. D.D.
By the Court (MILLS, FECTEAU & HANLON, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
D.D., the former husband (husband) of T.D. (wife), appeals from a judgment of divorce nisi of the Probate and Family Court, as amended, which, among other things, divides the parties' property and awards the parties shared legal custody of their children. The husband challenges primarily the judge's findings with respect to, and her treatment of, an Internet business created by the husband. In her cross appeal, the wife seeks, among other things, sole legal custody of the children.
1. Background. The husband immigrated to the United States from Ireland in 1987. The parties met in 1988, and they were married in March, 1991. The marriage produced two children, a daughter born in March, 1996, and a son born in September, 1999. The wife worked in customer service at MassMutual from 1990 until 2004 when, by agreement of the parties, she left to become a full-time homemaker. The parties undertook traditional roles, wherein the husband was the primary wage earner and the wife the primary caretaker of the children. After sixteen years of marriage, the wife filed a complaint for divorce on January 31, 2007. The husband is employed as a database administrator at MassMutual. In 2009, he earned a base salary of $111,283.68 and a bonus of $32,099. In addition to his work for MassMutual, the husband has been involved in Internet marketing since 2001. Among other Internet ventures, the husband developed a business that provides customers with information and “e-books” on obtaining government grants (grant business). In 2004, he sold this business to Newbridge Industries, his sister's company in Ireland, for $4,000. The judge credited the opinion of the wife's expert, John O'Brien, that the business was worth “between $390,000.00 and $444,000.00” at the time of sale. The judge used the average of these values, $417,000, as the actual value of the business. The judge concluded that the husband was not credible about the sale of the grant business or his current business income.
The judge included the net value of the grant business at the time of sale, $413,000, within the marital estate and awarded it to the husband as part of the division of the marital assets. She also attributed $3,691.77 a week in income to the husband.
The judgment, in addition, provides for the husband to pay $700 per week in child support and $700 per week in alimony. The parties were awarded shared legal custody of the children with primary physical custody to the wife.
This amount includes $2,787.14 from employment and $904.63 in attributed income.
2. Discussion. a. The property division. “The appropriate weighing and balancing of the [G.L. c. 208,] § 34, factors, and the resulting equitable division of the parties' marital property, is left to the judge's broad discretion.” Kittredge v. Kittredge, 441 Mass. 28, 43 (2004). “We review the judge's findings to determine whether [the judge] considered all the relevant factors under § 34, and no irrelevant factors,” Baccanti v. Morton, 434 Mass. 787, 790 (2001), and “whether the reasons for [her] conclusions are ‘apparent and flow rationally’ from [her] findings and rulings.” Ibid., quoting from Williams v. Massa, 431 Mass. 619, 631 (2000). We reverse a judgment with respect to property division only where it is “plainly wrong and excessive.” Baccanti, supra at 793, quoting from Mahoney v. Mahoney, 425 Mass. 441, 447 (1997). “Findings of fact made pursuant to G.L. c. 208, § 34, shall not be set aside unless clearly erroneous.” Brash v. Brash, 407 Mass. 101, 105 (1990). See Mass.R.Dom.Rel.P. 52(a) (1987).
i. The 2004 sale of the grant business. The husband argues that the judge abused her discretion by including the grant business in the marital estate, effectively treating it as a dissipated asset. He asserts, among other things, that the sale was not made in contemplation of divorce and “therefore was not a dissipation of marital assets or an attempt to deprive wife of a marital asset.” He also asserts that the wife enjoyed the benefits of the sale.
We consider it evident from the judge's findings of fact and rationale that she viewed the sale of the grant business to be, essentially, a sham transaction that was part of a pattern of financial misconduct on the part of the husband during the later years of the marriage. Indeed, the judge found explicitly that the husband “manipulated his assets prior to and during the pendency of the divorce proceedings in order to hide his business assets, which should be included in the marital estate,” and “has either voluntarily closed businesses, hidden, transferred or diverted income in order to defeat wife's claim to additional child support and/or alimony.”
Even were we to assume (as the husband appears to assert) that the appropriate analysis for the husband's transaction is under the standard espoused for dissipation, the Supreme Judicial Court has stated that “[h]owever defined, the concept of dissipation must be viewed within the context of the statutory factors governing the equitable division of marital property under G.L. c. 208, § 34.” Kittredge, supra at 37. One such factor is the “conduct of the parties during the marriage.” Id. at 38. “ ‘Conduct’ that has harmed the marriage or the marital estate may be viewed negatively” and considered by the court in fashioning an equitable division. Ibid. See Salten v. Ackerman, 64 Mass.App.Ct. 868, 874 (2005) (where many of the husband's reckless expenditures occurred well before the wife filed her complaint for divorce, we indicated that dissipation can occur in the absence of an intent to deprive a spouse of a fair share of the marital estate).
Here, the judge's findings support the notion that the husband's manipulation of his business interests, and his transfer to a close family member of a business interest worth over $400,000 for a mere $4,000, harmed the marital estate.
On the arguments made, we perceive nothing in the present case that would preclude the judge from including within the marital estate the net value of the grant business at the time of the sale.
In light of the foregoing, and given the judge's extensive and detailed findings, we decline to disturb the judgment based upon the judge's footnote providing that “[a]lthough there was testimony that the sale of [the grant business] was predicated upon an investigation by the postal service, the reasoning behind the sale is of no import to the Court.” (The wife had testified that she believed the husband made the sale because he was being investigated for fraud; the husband stated that the sale was for legitimate business purposes. We note also that while alleged dissipation may be tempered (or negated) by various factors, including a party's acquiescence to the conduct or activity in issue, see Kittredge, supra at 40–42; Salten, supra, the wife's limited testimony regarding the sale of the grant business did not require the judge to conclude that the wife's knowledge merited a reduction in the dissipated value.
While the parties do not raise the point, we note that the husband's sister is not a party to these proceedings. The judgment does not order the husband's sister to make any transfer of property. We do not intimate by our decision that the husband's sister is bound by the judge's findings with respect to the sale of the grant business. See Sampson v. Sampson, 62 Mass.App.Ct. 366, 379 n.23 (2004). Cf. Amrhein v. Amrhein, 29 Mass.App.Ct. 336, 339 (1990).
We are not persuaded by the husband's argument that the judge misunderstood the nature of the business, undermining her findings that the husband was not credible. Credibility determinations are “quintessentially the domain of the trial judge,” and “the judge's assessment is close to immune from reversal on appeal except on the most compelling of showings.” Johnston v. Johnston, 38 Mass.App.Ct. 531, 536 (1995). We have reviewed the trial record and the judge's findings, and conclude that the husband has not made such a showing. Relevant here, we are satisfied that the judge had an appropriate understanding of the grant business. Although the judge refers to the sale of “Emerald Enterprises” in her findings, she clarifies that the husband “utilized the name ‘Emerald Enterprises' for his E-book/internet marketing business” and lists the names under which the business was operated. It is readily apparent that she is referring to the grant business sold in 2004.
At trial, the husband referred to the business sold in 2004 as a “grants membership site” “contain[ing] eBooks to obtain government grants forms.” He acknowledges that the grant business was owned by Emerald Enterprises and operated under the .com names listed by the judge. Emerald Enterprises was succeeded in interest by Clearview Enterprises following the 2004 sale.
ii. The value of the grant business. We are bound by the judge's valuation of the grant business unless it is clearly erroneous. See Champion v. Champion, 54 Mass.App.Ct. 215, 218–219 (2002), citing Fechtor v. Fechtor, 26 Mass.App.Ct. 859, 863 (1989). The husband argues that the valuation was clearly erroneous because O'Brien's opinion was based on financial information from 2004 and 2005, instead of 2003. He contends that “[a] calculation based on the 2003 sales figures would have been more accurate to any possible valuation the parties could have possibly contemplated at the time of purchase [February 1, 2004].” However, if the husband wanted the court to rely on financial data from 2003, he could have introduced an expert valuation based on that year. The judge would have then been able to consider the competing valuations and determine which one was most credible. Even if the information from 2003 was more pertinent to the business's value, information from the year of the sale and the following year was not, in the circumstances, irrelevant, and it was not clearly erroneous for the judge to rely on the information she was provided.
The husband also contends that the judge ignored the consideration he received for the sale, a $4,000 payment and a commission agreement. He argues that by focusing on marketing efforts, he was able to earn more under the commission agreement than as owner of the business. The judge explicitly credited the $4,000 the husband received, which she subtracted from the total value of the business ($417,000) when she designated the business a marital asset worth $413,000. Her findings also acknowledge that the husband worked as a “consultant” for his sister's business following the sale. However, there was no requirement that the judge credit the husband's testimony regarding the value of the commission agreement. Indeed, the judge found that the husband was not reliable regarding his business income. She also found that he “was uncooperative about providing various documents needed to compile an accurate value of a business,” and the business “may have had a greater value” if he had provided the necessary documents.
The judge did err in finding that an expert for the husband, Steven Dane, testified that the grant business had no value at the time of sale. Dane testified about the value of another entity, Clearview Enterprises, in 2008. Regardless, the judge appropriately characterized the findings of the wife's expert, O'Brien. The judge's mistake with respect to Dane's testimony does not preclude the judge from finding the wife's expert credible.
iii. The equitable division of the marital estate. The husband argues that the inclusion of the $413,000 net value of the grant business in his share of the marital estate renders the division of the marital assets inequitable. Concluding, as we do, that the judge could properly include the business in the estate, we are not persuaded that the property division is plainly wrong and excessive.
We comment on two additional points. First, the husband asserts that the judge's finding in the amended judgment that she had overvalued the marital home by $37,000, and her order that the husband transfer $18,500 to the wife, increased the wife's share. We perceive nothing in the court's order that would require a reversal of the judgment. Second, the husband notes, correctly, that the judge mistakenly transposed the “3” and “9” in valuing an investment account that was assigned to him, such that it was worth $193,580.88, not its actual value of $139,580.88. The husband does not argue that this apparent typographical error should, in itself, result in a reversal of the judgment. Rather, he states that the judge's use of the higher figure further skews (albeit modestly) the equitable division in the case. There is nothing in the husband's argument that would cause us to disturb the orders for equitable division.
b. The attribution of income. The judge found that the husband's weekly income from employment was $2,787.14, and also attributed to him income of $904.63 per week for purposes of alimony and child support. The husband argues that “[i]n addition to improperly attributing income to [him] based off of the Court's erroneous findings, the Court abused its discretion by attributing the amount that it did.”
“In the proper circumstances, ‘[a] judge is not limited to a party's actual earnings but may ... consider potential earning capacity’ when attributing income.” C.D.L. v. M.M.L., 72 Mass.App.Ct. 146, 152 (2008), quoting from Heins v. Ledis, 422 Mass. 477, 485 (1996). “Attribution of income is particularly appropriate when a judge determines that a party (most often the primary earner and support provider) is voluntarily earning less than he or she is capable of earning through reasonable effort.” C.D.L., supra at 152. Additionally, a judge may “draw all reasonable inferences” against a party who fails to provide adequate financial data in a divorce proceeding, Salten, 64 Mass.App.Ct. at 873, quoting from Grubert v. Grubert, 20 Mass.App.Ct. 811, 822 (1985), and “imputation of income is appropriate where a party has made vague, misleading, or untruthful entries on a financial statement.” M.C. v. T.K., 463 Mass. 226, 240 (2012).
The attributed income amounts to $47,040.76 a year, far less than the husband's business income from the years leading up to the divorce. For example, in 2006, the husband earned $467,188 in business income.
The husband failed to provide accurate tax returns for the years 2007, 2008, and 2009, making it impossible for the judge to determine his later business income. The judge found that the husband was not credible regarding his finances, had ongoing business expenses, receives contributions from his family that he does not have to repay,
The parties' joint tax returns reflect the following business income earned by the husband during the marriage (excluding his MassMutual salary or bonuses): 2001—$1,031; 2002—$20,544; 2003—$166,811; 2004—$331,797; 2005—$532,112; and 2006—$467,188.
and continues to live a “lavish lifestyle.” As we have stated, the judge expressly found that the husband “has either voluntarily closed businesses, [or] hidden, transferred or diverted income in order to defeat wife's claim to additional child support and/or alimony.” We are not persuaded that these findings are in error.
The husband's family “pays for his cars, many entertainment expenses, as well as the mortgage on his home,” and “he can obtain funds ‘from his family’ ... without incurring any obligation of repayment.”
The husband also argues that because the attribution of income was based on findings that he was not credible with respect to his businesses, “the court has created a scenario where a material change in circumstances [is] unlikely to occur.” See G.L. c. 208, §§ 28, 37. As we have discussed, the attribution of income was based on several factors. Moreover, should the husband seek to modify his alimony or child support obligation in the future, he may provide accurate financial documentation demonstrating his actual business income.
c. Joint legal custody.
The parties stipulated that the wife would receive sole physical custody of the children, and the judge awarded the parties joint legal custody. In doing so, the judge stated that the parties were not at the point “where they appear to be totally incapable of maintaining a cooperative relationship.” While acknowledging that conflict between the parties “continues to exist,” the judge stated that the conflict is “primarily relative to the parties' inability to communicate as between husband and wife rather than significant differences regarding the upbringing of the children.” The judge was “hopeful” that once the divorce became final the parties “[would] slowly develop a relationship as responsible parents with a goal toward communication between them and in the best interests of their children.” Continuing, the judge found that joint legal custody would be in the children's best interest.
In her judgment and findings the judge uses interchangeably the terms “joint” and “share[d]” legal custody.
“The determination of custody rests within the discretion of the judge.” Kendall v. Kendall, 426 Mass. 238, 251 (1997), cert. denied, 524 U.S. 953 (1998). However, “[t]he material facts found and reported must support the judge's action in awarding joint legal custody to the parties.” Ibid. “[A]n error of law apparent on the record, or the absence of evidence in support of findings, or the failure of the findings to support the judge's orders will constitute ‘an abuse of discretion’ and require reversal.” Prenaveau v. Prenaveau, 81 Mass.App.Ct. 479, 486 (2012).
See Freedman v. Freedman, 49 Mass.App.Ct. 519, 521 (2000).
In discussing in Prenaveau, supra at 486 n.11, the standard of review for custody determinations, we stated: “In this sensitive and complex setting, we attempt to apply a standard of review more exact than some of the older roughhewn formulations of abuse of discretion, e.g., the standard ‘that no conscientious judge, acting intelligently, could honestly have taken the view expressed by him,’ [citation omitted]; or that abuse must consist of ‘whimsy, caprice, or arbitrary or idiosyncratic notions' [citation omitted].”
The judge's findings in this case do not support an award of joint legal custody and, consequently, the court's order constitutes an abuse of discretion. Joint or “shared legal custody” connotes “continued mutual responsibility and involvement by both parents in major decisions regarding the child's welfare including matters of education, medical care and emotional, moral and religious development.” G.L. c. 208, § 31, as amended by St.1989, c. 689. See Mason v. Coleman, 447 Mass. 177, 181–182 (2006). “ ‘Although complete agreement between parents to implement joint custody may not be necessary,’ in order to be effective ‘joint custody requires two capable parents with some degree of respect for one another's abilities as parents, together with a willingness and ability to work together to reach results on major decisions in a manner similar to the way married couples make decisions.’ “ Rolde v. Rolde, 12 Mass.App.Ct. 398, 405 (1981), quoting from Taussig & Carpenter, Joint Custody, 56 N.D. L.Rev. 223, 234 (1980). See Mason, supra at 182 (a shared custody arrangement is “generally appropriate only if the parties demonstrate an ability and desire to cooperate amicably and communicate with one another to raise the children”); O'Connell v. Greenwood, 59 Mass.App.Ct. 147, 155 (2003) (“orders for joint custody, physical or legal, cannot succeed without a true commitment to collaboration rarely produced by the hammer of contempt”). But see Doe v. Doe, 16 Mass.App.Ct. 499, 502 (1983) (where, although there was conflict between the parties, joint legal and physical custody was appropriate, as the conflict concerned the relationship between the parties and their inability to communicate; it did not involve specific areas of disagreement regarding the child's care, custody, and upbringing).
Here, the judge found that the parties had difficulty or problems communicating both during the marriage and the divorce proceedings. During the marriage, the husband would refuse to speak to the wife “for weeks at a time,” including during the birth of the parties' son, which the husband did not attend.
During the divorce proceedings, the husband “called the police six times to complain about the Wife's conduct with the children or to accuse her of stealing money or mail from him. The judge found that the wife did not steal the husband's mail or money. The wife also found voice-activated tape recorders in the home that more likely than not, the judge stated, were placed there by the husband. The judge found that the husband's actions “have exacerbated the level of conflict between the parties.”
The judge found that, at times, the husband would communicate with the wife through the children or would send an email to her from the “next room over” in the house in which they resided. The wife testified that the lack of communication continued throughout the marriage.
The judge also found that the parties “disagree relative to the children's health treatment and religious upbringing.”
The judge's findings concerning the children's health issues are particularly pertinent here. Both children have substantial medical issues and the wife has always been the parent to tend to their medical needs. The parties' daughter receives medical care for scoliosis. The husband, who the judge found has a fear of doctors and medical facilities, “disagrees with the way in which [the daughter's] condition is being addressed and opposes other recommended medical treatment for other issues.” He does not attend the daughter's appointments but “continuously disagrees with medical decisions made on her behalf or recommended by her doctors.” The parties' son has severe allergies, asthma, and ADHD. The wife must have the ability to respond to any allergic reactions at school, and provide special food for the child. Notwithstanding the child's allergies, including his allergy to dogs, the husband allowed a live-in girlfriend to have a dog in the home when the children visited. The husband did not remove the dog for months despite the concerns of the wife and the child's pediatrician. When the son's doctor recommended that the child be isolated after a vaccination, the husband disagreed and instead made arrangements to take the child to an arcade.
In view of this finding the judge's reliance on Doe, supra, is misplaced.
With respect to religion, the parties “agree[d] to raise the children Roman Catholic,” but “the husband's rejection of religion often results in the children not attending church on the weekends he has them.” The judge sought to address this potential problem in her parenting schedule orders by requiring the husband to drop the children off at the mother's house by 5:00 P.M. on weekends when he had not taken the children to church.
While we are mindful of the deference to be accorded a judge's custody determination, see Prenaveau, 81 Mass.App.Ct. at 486, the judge's own findings, taken together, and as set forth above, do not support the conclusion that the parties can meaningfully cooperate in making decisions for the children. In the circumstances, the order for joint legal custody cannot stand.
There is nothing in the parties' additional claims (including the wife's arguments that the judge should have attributed additional income to the husband and erred in establishing a life insurance amount that was insufficient to secure alimony and child support) that would cause us to further disturb the judgment.
3. Conclusion. So much of the judgment of divorce nisi, as amended, as awards the husband shared legal custody of the children is vacated, and the matter is remanded to the Probate and Family Court for the entry of a new order consistent with this memorandum and order. In all other respects, the judgment, as amended, is affirmed. The wife's request for attorney's fees associated with the appeal is denied.
So ordered.