545 S.W.3d 796
Ark. Ct. App.2018Background
- Terry and Lorene Wyatt divorced after a lengthy, contested proceeding; three businesses tied to Terry (A-1 Recovery, Inc.; A-1 Recovery Rental, LLC; A-1 Recovery Towing & Recovery, Inc.) owned most marital assets and paid many personal expenses.
- Terry formed A-1 Recovery, Inc. before marriage; the other two entities were created during the marriage and were used to pay household and personal expenses.
- After Lorene filed for divorce, Terry caused conveyances and sales of the marital residence (56 Wyatt Lane) and of A-1 Recovery Rental, LLC to third parties; he later sold A-1 Recovery Towing & Recovery, Inc.
- The divorce decree (May 24, 2013) reserved property division by agreement; the court later (Jan. 6, 2016) entered a detailed property, support, and fee judgment valuing marital property as of the August 2011 separation date.
- The trial court pierced the corporate veil, treated the three entities as Terry’s alter egos, awarded Lorene one-half of the marital value of A-1 Recovery, Inc. and its subsidiaries ($412,765), imputed monthly income to Terry ($12,833.73) for child-support calculation, and awarded Lorene $31,950 in attorney’s fees.
Issues
| Issue | Plaintiff's Argument (Terry) | Defendant's Argument (Lorene) | Held |
|---|---|---|---|
| 1) Reservation of property division | Court erred by not distributing marital property when divorce decree entered (statute mandates distribution at decree). | Parties consented to postpone distribution; reservation permitted by precedent. | Affirmed: parties may agree to delay division; Terry invited the error. |
| 2) Treating A-1 Recovery, Inc. as marital property | Court erred treating pre-marriage corporation as marital asset. | Lorene contributed to growth; corporate veil pierced making entities marital. | Affirmed (on veil doctrine): entities treated as marital property after veil piercing. |
| 3) Valuation date | Court erred valuing assets as of separation (Aug 2011) instead of divorce date (May 2013). | Post-separation transfers and concealment by Terry made post-separation valuation unreliable; separation date necessary for equity. | Affirmed: court properly used separation date given Terry’s conduct. |
| 4) Piercing the corporate veil | No precedent for piercing veil in divorce; insufficient finding of injury; prior rulings on conveyances preclude re-litigation. | Terry abused corporate form, commingled funds, used corporate assets for personal expenses to Lorene’s detriment. | Affirmed: factual finding of abuse and injury supported; veil may be pierced in domestic cases. |
| 5) Imputing income for child support | Court erroneously imputed income from corporate-paid benefits and assets; some benefits were charitable or not Terry’s. | Corporate-paid personal benefits and use of assets (house, truck, boat) reflect income and should be imputed. | Affirmed: court permissibly imputed income based on lifestyle and credibility findings. |
| 6) Attorney's fees award | Fees should be reconsidered if other rulings reversed. | Fee award equitable and supported by statute and circumstances. | Affirmed: no reversal of underlying rulings, so fee award stands. |
Key Cases Cited
- Skokos v. Skokos, 344 Ark. 420 (Ark. 2001) (standard for clearly erroneous appellate review)
- Myrick v. Myrick, 339 Ark. 1 (Ark. 1999) (deference to trial court credibility findings)
- Forrest v. Forrest, 279 Ark. 115 (Ark. 1982) (parties may agree to postpone property division)
- Anderson v. Stewart, 366 Ark. 203 (Ark. 2006) (piercing corporate veil when corporate form abused to injure a third party)
- Dalrymple v. Dalrymple, 74 Ark. App. 372 (Ark. Ct. App. 2001) (no veil piercing where no abuse shown)
- Layman v. Layman, 292 Ark. 539 (Ark. 1987) (treatment of pre-marital corporations in divorce)
- Dunn v. Westbrook, 334 Ark. 83 (Ark. 1998) (appellate court may affirm correct result even if trial court relied on wrong reason)
- Hoover v. Hoover, 70 Ark. App. 215 (Ark. Ct. App. 2000) (statute’s purpose is equitable division of property)