Lia Rain Jensen v. Todd Calvin Jensen
333569
| Mich. Ct. App. | Jan 9, 2018Background
- Lia Jensen (plaintiff) and Todd Jensen (defendant) married in 2013 and divorced after a short marriage with no children; dispute concerned classification and division of assets, especially defendant’s closely held business, Arista Truck Systems, Inc.
- Plaintiff brought a Valpak franchise into the marriage (financed by loan) and left employment to help build it; Valpak valued at $78,000 (loan balance).
- Defendant owned Arista and the commercial property pre-marriage and bought the marital residence (Rosewood) before marriage; dispute over how much Arista appreciated during the marriage.
- Two valuation experts testified using income/EBITDA approaches; plaintiff’s expert valued Arista’s appreciation at about $2.04M, defendant’s expert at $400K; trial court credited the defendant’s expert.
- Trial court found total marital estate $598,613, awarded 60% to defendant and 40% to plaintiff (plaintiff’s cash equalization reduced by Valpak value), and declined to treat Arista’s retained earnings as marital income; judgment affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of defendant expert’s written report | Report was hearsay and should be excluded | Report admissible; expert also testified orally | Trial court abused discretion admitting report but error was harmless because testimony was cumulative and court relied on live testimony |
| Foundation for expert opinion (MRE 703/MRE 702) | Larson relied on unproduced financials; testimony lacked foundation | Foundation adequate; plaintiff failed to timely, specifically preserve objection | Objections unpreserved on appeal; appellate court declined to review in its discretion |
| Whether Arista’s appreciation during marriage is marital property | Appreciation should not be taken if Arista is separate property absent plaintiff’s contribution | Appreciation is marital where business increased through defendant’s active efforts | Appreciation during marriage that results from defendant’s active efforts is part of marital estate; trial court properly included $400K increase |
| Whether Arista’s retained earnings are marital income | Retained earnings (S‑corp taxed to owner) should be marital income subject to division | Retained earnings belong to separate corporate entity unless facts show unreasonable withholding to avoid marital claims | Court adopts fact‑specific rule: presumptively retained earnings are corporate (separate); may be included if owner had distribution control and entity unreasonably withheld earnings; here trial court did not err in refusing to treat retained earnings as marital income |
Key Cases Cited
- Hecht v. Nat’l Heritage Academies, Inc., 499 Mich. 586 (Mich. 2016) (abuse-of-discretion standard for evidentiary rulings)
- Solomon v. Shuell, 435 Mich. 104 (Mich. 1990) (limits on admitting expert reports prepared for litigation)
- Attorney General v. John A. Biewer Co., Inc., 140 Mich. App. 1 (Mich. Ct. App. 1985) (hearsay/expert report principles)
- Pelton v. Pelton, 167 Mich. App. 22 (Mich. Ct. App. 1988) (trial court discretion to weigh competing expert valuations)
- Hanaway v. Hanaway, 208 Mich. App. 278 (Mich. Ct. App. 1995) (spouse’s nonfinancial household contributions can justify invading separate-business appreciation)
- Dart v. Dart, 460 Mich. 573 (Mich. 1999) (separately owned assets may be included in marital estate in certain situations)
- Reeves v. Reeves, 226 Mich. App. 490 (Mich. Ct. App. 1997) (increase in value due to spouse’s active efforts may become marital)
- Green v. Ziegelman, 310 Mich. App. 436 (Mich. Ct. App. 2015) (respect separate corporate existence; disregard only for misuse/fraud)
- Diez v. Davey, 307 Mich. App. 366 (Mich. Ct. App. 2014) (business judgment and historical practices relevant to imputing corporate funds)
- Ramon v. Ramon, 963 A.2d 128 (Del. 2008) (retained earnings of closely held corporation may be marital property depending on facts)
- Sparks v. Sparks, 440 Mich. 141 (Mich. 1992) (equitable — not equal — division of marital estate; list of distributive factors)