LOUTTS v. LOUTTS (AFTER REMAND)
Docket No. 318468
Court of Appeals of Michigan
February 10, 2015
309 Mich. App. 203
Docket No. 318468. Submitted February 3, 2015, at Lansing. Decided February 10, 2015, at 9:05 a.m. Leave to appeal sought.
On remand from the Court of Appeals, Loutts v Loutts, 298 Mich App 21; 826 NW2d 152 (2012), the Washtenaw Circuit Court, Archie C. Brown, J., recalculated defendant Irina V. Loutts‘s spousal support based on the imputation to her of a lower annual income, and denied her motion to modify and extend her spousal support, to award her attorney and expert witness fees, and to use the value of plaintiff Georgii B. Loutts‘s business for both property division and spousal support. Defendant appealed.
The Court of Appeals held:
1. The trial court improperly held that defendant‘s failure to requеst a modification and extension of her spousal support before termination of the initial award of rehabilitative spousal support prevented it from granting defendant‘s request to modify and extend her spousal support. The plain language of
2. The trial court did not abuse its discretion by limiting use of the value of plaintiff‘s business to determining an equitable division of the parties’ property. Noting defendant‘s bad behavior and her receipt of half the value of the business, the trial court was within its discretion when it refused to use the value of the business both to divide the parties’ property and to calculate defendant‘s spousal support.
3. The trial court did not abuse its discretion by refusing to award defendant her attorney fees and expert witness fees because defendant failed to show that she was “unable to bear thе expense of the action. . . .”
Affirmed.
1. DIVORCE — SPOUSAL SUPPORT — MODIFICATION.
2. DIVORCE — DIVISION OF PROPERTY — SPOUSAL SUPPORT — VALUE OF PROPERTY.
A trial court has discretion over whether to use the value of a party‘s property for purposes of determining an equitable division of property or awarding spousal support, or both; in deciding whether to use the value of property for either or both property division and spousal supрort, a trial court must consider the specific facts and circumstances of the case to determine what is warranted by the equities in the case.
3. DIVORCE — ATTORNEY FEES.
A trial court must consider all the circumstances and the equities involved when determining whether to award attorney fees in divorce cases; a party may not solely rely on the fact that his or her annual income is less than the amount of attorney fees owed, but the party must show that he or she is without the means to pay those expenses; it is not an abuse of a trial court‘s discretion to consider the cash and prоperty a party receives in a divorce when determining whether that party can bear the expenses of the divorce, as long as the party is not required to pay the fees owed from assets that the party is relying on for support; a trial court may also properly consider a party‘s conduct during the divorce proceedings and whether the party engaged in conduct that unnecessarily increased the costs of the litigation.
Kline Legal Group, PLC (by John Kenneth Kline and Elizabeth A. Kitchen), for Georgii B. Loutts.
Faupel Law, PC (by Marian L. Faupel), for Irina V. Loutts.
Before: SAAD, P.J., and OWENS and K. F. KELLY, JJ.
PER CURIAM. In this postjudgment divorce proceeding, defendant Irina Loutts appeals by leave granted1 two orders issued by the trial court on July 17, 2013, and September 13, 2013, which, in toto, recalculated defendant‘s spousal support, but denied defendant‘s requests to modify and extend her spousal support, to award her attorney and expert witness fees, and to use the value of plaintiff‘s business for both property division and spousal support. For the reasons discussed below, we affirm.
I. FACTS AND PROCEDURAL HISTORY
The parties are Russian immigrants who were married in 1988 and came to the United States a few years later. They have one adult son. In 2000, plaintiff Georgii Loutts (referred to as George) started QPhotonics, a business that buys, sells, imports, and exрorts light emitting diodes and laser diodes. Plaintiff has a Ph.D. in Materials Science earned in 1990 from the General Physics Institute in Moscow, and he worked as a physics professor at Norfolk State University in Virginia until the parties moved to Ann Arbor in 2007.
Defendant has a Ph.D. in International Relations, earned in 2004 from Old Dominion University in Norfolk, Virginia, and a master‘s degree in Economics from Moscow State University in Moscow. Defendant had earned $14,000 a year as an adjunct professor at Old Dominion, and she was hired as a bookkeeper/accountant for QPhotonics at a salary of
Plaintiff filed for divorce in December 2008. Following a bench trial, the parties’ divorce judgment was entered on March 9, 2010. The trial court ruled that permanent spousal support was not appropriate “because both parties have PhDs, are in good health, and are clearly employable.” However, plaintiff was required to pay defendant rehabilitative spousal support in the amount of $1,510 a month for a period of four years. Plaintiff was awardеd the marital home, and defendant was ordered to vacate the home before April 1, 2010, which she did. The trial court determined the value of QPhotonics to be $280,000 and awarded the business to plaintiff, and half of its value, $140,000, to defendant. The rest of the property was split approximately equally, and plaintiff was ordered to pay defendant $247,788 as an equalizer.
At trial, defendant indicated some intent to develop a business similar to QPhotonics. Consequently, in the divorce judgment, the trial court ordered that defendant was restrained for three years from competing in any way with QPhоtonics. Because both parties requested to be awarded the company and to have a noncompete restriction issued against the other spouse, this Court upheld the restriction. Loutts v Loutts, 298 Mich App 21, 36; 826 NW2d 152 (2012) (Loutts I).
Following the judgment of divorce, defendant appealed in this Court, which remanded to the trial court to (1) “address and decide defendant‘s request for attorney and expert fees under
Nine months after this Court‘s decision to remand, defendant filed in the trial court a “Motion to Recalculate Spousal Support, Modify Spousal Support, and Extend It; and For Attorney Fees and Expert Witness Fees.” Defendant requested that the trial court hold an evidentiary hearing on spousal support, attorney fees, and expert witness fees, and that it modify and extend her spousal support based on her continuing need for support and plaintiff‘s ability to pay. Defendant argued that her health hаd deteriorated substantially. Specifically, she alleged that she suffered from bleeding stomach ulcers that led to hospitalization on three occasions, the first occurring in March 2012. Nevertheless, defendant asserted that she continued to look for work. However, she alleged that she was unable to obtain suitable employment because she was overqualified for the few jobs that existed in her geographical area, and because Michigan‘s declining economy made it nearly impossible to find work.
Based on the extensive nature of the file, the trial сourt determined that an evidentiary hearing was not necessary and denied defendant‘s request for one. As authorized by
The trial сourt took under advisement the remaining issues raised in defendant‘s motion, as well as this Court‘s remand directives, and addressed them in its September 13, 2013 order. The trial court determined “that the equities in this case [did] not warrant utilizing the value of Q-Photonics for purposes of both property division and spousal support,” and that defendant‘s request for attorney and expert witness fees was without merit. Consequently, this appeal ensued.
II. SPOUSAL SUPPORT
Defendant first challenges the spousal support award and the trial court‘s denial of her motion to modify and extend spousal support. The standard of
It is within the trial court‘s discretion to award spousal support, and we review a spousal support award for an abuse of discretion. Woodington v Shokoohi, 288 Mich App 352, 355; 792 NW2d 63 (2010); Berger v Berger, 277 Mich App 700, 726; 747 NW2d 336 (2008). We also review for an abuse of discretion a trial court‘s decision whether to impute income to a party. Carlson v Carlson, 293 Mich App 203, 205; 809 NW2d 612 (2011). “An abuse of discretion occurs when the trial court‘s decision falls outside the range of reasonable and principled outcomes.” Woodington, 288 Mich App at 355. “The object in awarding spousal support is to balance the incomes and needs of the parties so that neither will be impoverished; spousal support is to be based on what is just and reasonable under the circumstances of the case.” Berger, 277 Mich App at 726. We review for clear error the trial court‘s factual findings regarding spousal support. Id. at 727. A finding is clearly erroneous if, after reviewing the entire record, we are left with the definite and firm conviction that a mistake was made. Woodington, 288 Mich App at 355. If the trial court‘s findings are not clearly erroneous, we must determine whether the dispositional ruling was fair and equitable under the circumstances of the case. Berger, 277 Mich App at 727. We must affirm the trial court‘s dispositional ruling unless we are convinced that it was inequitable. Id. [Loutts I, 298 Mich App at 25-26.]
At the outset, we decline to address defendant‘s argument that because the trial court did not properly consider the spousal support factors set out in Olson v Olson, 256 Mich App 619, 631; 671 NW2d 64 (2003), spousal support in the amount of $1,510 a month for four years was insufficient. We are bound by the law of the case doctrine. See Ashker ex rel Estate of Ashker v Ford Motor Co, 245 Mich App 9, 13; 627 NW2d 1 (2001). This Court in Loutts I rejected defendant‘s
We also decline to address defendant‘s argument that the trial court erred by failing to grant an evidentiary hearing on the motion to extend spousal support, because defendant abandoned this issue by failing to address the merits of her assertion of error. Thompson v Thompson, 261 Mich App 353, 356; 683 NW2d 250 (2004). The trial court stated that based on the extensive nature of the file, no evidentiary hearing was necessary. On appeal, defendant does not argue how this decision was error.
Defendant contends that there is no requirement that a motion to modify or extend spousal support be made within the initial term of support awarded. The trial court denied defendant‘s motion to modify and extend spousal support, citing the fact that the support terminated on April 23, 2013, before the request to modify and extend was made. Accordingly, the trial court held that any request to modify or extend spousal support had to be made before the support terminаted.
On petition of either party, after a judgment for alimony or other allowance for either party or a child, or after a judgment for the appointment of trustees to receive and hold property for the use of either party or a child, and
subject to section 17, the court may revise and alter the judgment, respecting the amount or payment of the alimony or allowance, and also respecting the appropriation and pаyment of the principal and income of the property held in trust, and may make any judgment respecting any of the matters that the court might have made in the original action.
In interpreting
“[T]here must come a time where these matters are over with. The alimony has been terminated. To think then that person could come in in five years, ten years, 20 years later and ask again that alimony be reinstated, the Court finds to be a situation that simply would never put matters to rest. One would never know when the othe[r]
party might decide that they want to come in and at least file a motion. Maybe they can‘t meet the criteria, as has been pointed out by counsel, because there are certain criteria, but these matters have to be laid to rest.” [Rickner, 459 Mich at 376 (second alteration in original).]
This Court affirmed, but our Supreme Court reversed, stating,
In this instance, we are faced with a statute that simply provides that “[o]n petition of either party, after a judgment for alimony. . . the court may revise and alter the judgment, respecting the amount or payment of the alimony . . . and may make any judgment respecting any of the matters that the court might have made in the original action.”
MCL 552.28 . This is a case in which the court originally provided alimony, and thus continuing jurisdiction is plainly provided by the statute.This conclusion is buttressed by the absence of a prior Michigan apрellate decision holding that the statutory power to modify is extinguished if it is once exercised to eliminate alimony. Further, the statutory power to modify is not dependent on triggering language in the judgment.
For these reasons, we are persuaded that the proper reading of the statute is that the Legislature intends, in cases in which alimony is initially ordered, that the court retain the power to make necessary modifications in appropriate circumstances. [Rickner, 459 Mich at 378-379 (citations omitted).]
Accordingly, based on Rickner and the plain language of
Further, as the trial court noted in its first order, despite claiming that her ulcers began in March 2012, defendant did not file her motion to modify and extend spousal support until June 2013, which certainly diminished the urgency fоr further spousal support to address her alleged health issues. Moreover, except for the few times she was hospitalized and prevented from working, defendant never asserted that her alleged medical issues hindered her ability to work. In fact, she stated that despite her ulcers, she continued to look for employment. Defendant‘s main reason for seeking continued spousal support appears to be her inability to obtain
Next, defendant argues that the trial court erred by dеtermining that the equities in this case did not warrant using the value of QPhotonics for purposes of both property division and spousal support. The trial court determined that the valuation of QPhotonics could be used for either property division or spousal support, but not both. However, in Loutts I, this Court held that there is no bright-line rule. Loutts I, 298 Mich App at 31. Rather,
On remand, the trial court thoroughly discussed its decision to use the value of QPhotonics for the purpose
The trial court also cited defendant‘s extensive bad behаvior during the proceedings, including her numerous unsubstantiated allegations against plaintiff, and the fact that defendant did receive half the value of the business that resulted from plaintiff‘s own labors. The court further noted that defendant had extensive knowledge of QPhotonics and could establish a competing business that would “create havoc for,” and significantly reduce the value of, QPhotonics. Therefore, contrary to defendant‘s argument, the trial court did as this Court directed. It considered the equities of this case, and what was just and reasonable under the circumstances, and determined that the value of the business would only be used for the purposes of property division. We conclude that the record supports the trial court‘s factual findings, and its decision was within the range of reasonable and principled outcomes.
III. ATTORNEY FEES AND COSTS
Finally, defendant argues that the trial court erred by declining to award her attorney and expert witness fees. We disagree. We review for an abuse of discretion
This Court remanded for the trial court “to address and decide defendant‘s request for attorney and expert fees under
The Myland Court further stated that “a party sufficiently demonstrates an inability to pay attorney fees when that party‘s yearly income is less than the amount owed in attorney fees.” Myland, 290 Mich App at 702. Although this Court in Loutts I seemed to imply that this is a dispositive rule, Loutts I, 298 Mich App at 25,2 a fair reading of Myland indicates otherwise.
Myland, 290 Mich App at 702, cited Stallworth v Stallworth, 275 Mich App 282, 288-289; 738 NW2d 264 (2007), in which this Court stated the following:
Necessary and reasonable attorney fees may be awarded to enable a party to carry on or defend a divorce action. In the present cаse, the trial court decided that awarding plaintiff attorney fees was necessary to enable her to obtain a divorce. The parties stipulated that each attorney was owed $18,500. Plaintiff was awarded $10,000 in attorney fees. Because plaintiff‘s yearly income is less than the amount she owed her attorney, she sufficiently demonstrated her inability to pay her attorney fees. Furthermore, defendant earns more than double what plaintiff earns in a year, which demonstrated his ability to contribute to plaintiff‘s attorney fees. Under these circumstances, the trial court‘s ruling wаs within the range of reasonable and principled outcomes. [Stallworth, 275 Mich App at 288-289 (citations omitted).]
Therefore, it is clear that this Court in Stallworth was merely stating that the particular factual circumstances of that case show that the plaintiff established her inability to pay. The Court did not state that when a party‘s attorney fees exceed that party‘s yearly income, it is dispositive of the party‘s ability to pay in all cases. Rather, it was merely an example of one way a party may demonstrate an inability to pay, and whether a party has an inability to pay is dependent on the particular facts and circumstances of еach case. As the Myland Court stated:
It [i]s incumbent upon the trial court to consider whether attorney fees [a]re necessary for plaintiff to defend her
suit, including whether, under the circumstances, plaintiff would have to invade the same spousal support assets she is relying on to live in order to pay her attorney fees and whether, under the specific circumstances, defendant has the ability to pay or contribute to plaintiff‘s fees. [Myland, 290 Mich App at 703.]
This requires a trial court to give “special consideration to the specific financial situations of the parties and the equities involved.” Id.
In this case, the trial court concluded that defendant failed to carry her burden of proving that she was unable to bear the expense of the litigation. In support of its conclusion, the trial court cited the following facts: defendant received a cash equalizer payment of $247,788, defendant would receive rehabilitative spousal support for four years, and defendant received $50,000 early in the litigation as an advance against the property settlement. These findings are not clearly erroneous, particularly where the record shows that defendаnt received approximately $310,000 in cash from the divorce, which included a cash equalizer payment of $247,788 and a distribution of $62,630.50 from plaintiff‘s retirement account, as well as $1,510 in monthly spousal support for four years. Defendant did not show that she would have to invade the spousal support assets that she is relying on to live to pay her attorney fees and costs. See Myland, 290 Mich App at 702-703.
Further, this Court has interpreted
Affirmed.
SAAD, P.J., and OWENS and K. F. KELLY, JJ., concurred.
