Sally Carol Grasch v. Albert Franklin Grasch Jr
2016 SC 000591
| Ky. | Dec 12, 2017Background
- Marriage dissolution between Sally and Albert Grasch; Albert was an active lawyer who had existing contingent-fee contracts at time of divorce.
- Trial court treated contingent-fee contracts as future income (not marital property) and divided income when received.
- Sally appealed, arguing contingent-fee contracts are marital property subject to equitable division; Albert argued they are not marital property.
- Kentucky Supreme Court accepted discretionary review to decide whether contingent-fee contracts are marital property and how any share should be distributed.
- Court compared contingent-fee interests to nonvested pension and other "chose in action" interests, focusing on spouse contributions during the marriage.
- Court reversed the Court of Appeals and remanded, holding such contracts are marital property and must be divided using a delayed-distribution method.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are contingent-fee contracts marital property subject to division? | Grasch (Sally): Yes — the contracts (chose in action) arose during marriage and their value should be shared. | Grasch (Albert): No — contingent fees are future income/expectancy, not divisible property until earned. | Yes — contingent-fee contracts are marital property under KRS 403.190(2). |
| If divisible, how should distribution be accomplished? | Sally: Court should allocate a share of the contingent-fee value attributable to marital period. | Albert: Court may treat eventual fee as income when/if received, not divide present interest. | Use delayed-division method: decree determines formula now; actual payments divided as and when fees are earned/received. |
| What measure of the non-attorney spouse's share? | Non-attorney entitled to portion attributable to attorney spouse's pre-dissolution work and marital contributions. | (Implicit) Share uncertain until fee vests; vesting limits division. | Share limited to portion attributable to work performed during marriage; vesting does not bar division. |
| Procedural obligations after decree? | Require notice and further orders when fee is realized. | (Implicit) No special procedure beyond income reporting. | Trial court should order attorney-ex-spouse to notify court and non-attorney ex-spouse when fee is earned/lost to effect delayed distribution. |
Key Cases Cited
- Travis v. Travis, 59 S.W.3d 904 (Ky. 2001) (broad definition of property under KRS 403.190)
- First Nat. Bank of Louisville v. Progressive Cas. Ins. Co., 517 S.W.2d 226 (Ky. 1974) (contingent-fee contract as a chose in action/right to enforce lien)
- Poe v. Poe, 711 S.W.2d 849 (Ky. App. 1986) (recognized nonvested interests and applied delayed-division method)
- Young v. Young, 314 S.W.3d 306 (Ky. App. 2010) (uses delayed division and treats classification of marital property as legal question reviewed de novo)
- Baker v. Shapero, 203 S.W.3d 697 (Ky. 2006) (attorney discharged from contingency employment may recover on quantum meruit)