Smith v. Smith
| Docket Number: | 2009-CA-01661-COA Linked Case(s): 2009-CA-01661-COA2009-CT-01661-SCT |
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| Oral Argument: | 06-01-2011 | |
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| Court of Appeals: |
Opinion Link Opinion Date: 11-01-2011 Opinion Author: Maxwell, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Divorce: Habitual cruel and inhuman treatment - Gambling losses - Equitable distribution of marital property - Rental-property business Judge(s) Concurring: Lee, C.J., Griffis, P.J., Barnes, Ishee and Russell, JJ. Non Participating Judge(s): Myers and Roberts, JJ. Concur in Part, Concur in Result 1: Irving, P.J. Concurs in Result Only: Carlton, J. Procedural History: Bench Trial Nature of the Case: CIVIL - DOMESTIC RELATIONS |
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| Trial Court: |
Date of Trial Judgment: 10-08-2009 Appealed from: Itawamba County Chancery Court Judge: Jacqueline Mask Disposition: DIVORCE GRANTED TO APPELLEE ON GROUNDS OF HABITUAL CRUEL AND INHUMAN TREATMENT AND CONSTRUCTIVE DESERTION; PROPERTY DE S IGNAT ED AND DIVIDED Case Number: 2006-0109-M |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Billy Pink Smith |
RICHARD SHANE MCLAUGHLIN |
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| Appellee: | Sue Yielding Smith | JAK MCGEE SMITH |
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| Topic: | Divorce: Habitual cruel and inhuman treatment - Gambling losses - Equitable distribution of marital property - Rental-property business |
| Summary of the Facts: | Sue Smith was granted a divorce from her husband Billy Smith based partly on Billy’s gambling losses, which exceeded $300,000. In dividing the property, the chancellor valued Billy’s gambling losses at $314,000. Finding Billy had committed wasteful dissipation, the chancellor ordered him to reimburse Sue one-half of this amount—$157,000. The chancellor’s overall distribution of the marital estate was roughly equal between the parties. Billy appeals. |
| Summary of Opinion Analysis: | Issue 1: Habitual cruel and inhuman treatment Billy argues the chancellor erred by granting the divorce based primarily on his gambling losses. He contends gambling can never, in itself, constitute a ground for divorce based on habitual cruelty. To obtain a divorce on this ground, the plaintiff must show conduct that either endangers life, limb, or health, or creates a reasonable apprehension of such danger, rendering the relationship unsafe for the party seeking relief, or is so unnatural and infamous as to make the marriage revolting to the non-offending spouse and render it impossible for that spouse to discharge the duties of marriage, thus destroying the basis for its continuance. The plaintiff must show a casual connection between the defendant’s conduct and the impact on the plaintiff. And the defendant’s cruelty must not be too temporally remote from the separation. To prove habitual cruelty, the plaintiff must show more than mere unkindness, rudeness, or incompatibility. Although in cases of violence a single incident may be sufficient for a divorce, generally the plaintiff must show a pattern of conduct. Billy did not create a danger to Sue’s safety, nor an apprehension of danger, so the focus is on the second prong of the test for habitual cruelty—whether any of Billy’s conduct was so “unnatural and infamous” that the marriage became revolting to Sue and rendered it impossible to discharge her marital duties without risk to her health. Billy claims the chancellor should not have focused so heavily on his gambling losses which totaled over $300,000. However, it is certainly significant that after thirty-five years of marriage, Billy suddenly became an excessive gambler and unilaterally squandered hundreds of thousands of dollars in marital assets over a relatively short period of time. The chancellor also looked to the dishonest methods Billy utilized to finance his habit, and his sexual demands of Sue. The record shows Billy made no less than three material misrepresentations to financial institutions in obtaining loans. There is no error in the chancellor’s decision that Billy’s behavior, taken as a whole, constitutes habitual cruelty. His qualifying conduct includes not only his gambling losses of over $300,000, but his series of intentional, often dishonest, and possibly criminal acts, through which he dissipated the parties’ assets to fund his gambling addiction. His sexual and personal-hygiene issues that rendered the relationship revolting to Sue also factored into the chancellor’s cruelty finding. Issue 2: Gambling losses Billy argues the chancellor erred in finding him responsible for reimbursing Sue for one half the amount of his gambling losses. He also claims the chancellor’s $314,000 valuation of his gambling debt is inaccurate and clearly erroneous. In ordering an equitable distribution, chancellors are directed to classify the parties’ assets as marital or separate property, determine the value of those assets, and divide the marital estate equitably based upon the factors set forth in Ferguson. Sue utilized several methods to prove the extent of Billy’s gambling losses. She subpoenaed Billy’s gambling records from 2000 forward and presented expert testimony from a CPA, who determined Billy’s net gambling losses totaled $326,220. Sue also corroborated Jones’s estimates by introducing financial records of the parties’ businesses. Billy claims the chancellor ignored his winnings from the casinos. Specifically, he argues his winnings include $121,000, which he purportedly gifted to his son. However, there was no documentary support for the alleged gift. Also, Billy fails to show how this $121,000 figure—even if accurate—contradicts Sue’s proof that Billy’s net gambling losses exceeded $314,000. Because the record—including expert testimony and documentary evidence—supports the chancellor’s finding that the gambling losses totaled at least $314,000, there was no manifest error in her decision. The Supreme Court has not adopted a specific test to discern when one spouse’s alleged misuse of marital funds constitutes “dissipation.” Yet the court has indicated that the dissipation must be “wasteful.” It is reasonable when considering if marital assets have been dissipated to look to whether the assets in question were actually wasted or misused. Though Mississippi has no definitive standard, Indiana courts consider the following factors in determining whether dissipation has occurred: whether the expenditure benefitted the marriage or was made for a purpose entirely unrelated to the marriage; the timing of the transaction; whether the expenditure was excessive or de minimis; and whether the dissipating party intended to hide, deplete, or divert the marital assets. All factors favor a finding that dissipation occurred here. Billy’s gambling was for a purpose unrelated to the marriage. The gambling occurred during the time period leading up to the separation. The expenditure was excessive. Billy surreptitiously diverted marital assets to fund his gambling addiction, through a pattern of fraudulent acts. Upon discovery of the seriousness of Billy’s addiction, Sue pleaded with Billy to stop gambling, but he refused. If a debt is considered wasteful dissipation, the court should next consider what amount should be reimbursed to the marital estate (or offset from the dissipating spouse’s share of the marital estate). Here the chancellor’s order required Billy to compensate Sue $157,000, representing one-half of his total gambling losses. This sum was to be paid from the sale of the marital residence, valued at $225,000. Billy argues this award was inequitable. There is no dispute that the assets Billy dissipated through gambling were marital assets. Finding a roughly equal overall award was appropriate, the chancellor returned to Sue a value of one-half of the dissipated marital assets. There was no manifest error in this decision. Issue 3: Rental-property business Billy argues the chancellor erred by finding the parties’ rental-property business was entirely marital property. While it is undisputed that 75% of the business is marital, Billy argues the chancellor erred in classifying the remaining 25% interest, which he purchased from his son following the separation, as marital. The beginning date for the accumulation of marital property is the date of the marriage. The ending date is the date of divorce unless there is an order, such as a separate maintenance order or temporary-support order, which cuts off the accumulation of marital property. But if an asset is acquired after this line of demarcation with marital property, the acquired asset is marital property. Billy fails to specify on appeal any documentation or testimony to refute the chancellor’s finding that he used marital assets in purchasing his son’s 25% interest in the business. Thus, there is no basis for reversal on this issue. |
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