West, et al. v. West
| Docket Number: | 2008-CA-01700-SCT Linked Case(s): 2008-CA-01700-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 03-22-2012 Opinion Author: Dickinson, P.J. Holding: ON DIRECT APPEAL: AFFIRMED IN PART; REVERSED IN PART AND REMANDED; ON CROSS-APPEAL: AFFIRMED IN PART; REVERSED IN PART AND REMANDED |
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| Additional Case Information: |
Topic: Contempt - Periodic alimony - Material change in circumstances - Equitable distribution - Restrictions on transfer agreements - Life insurance - Financial status - Loans - Sale of stock - Prejudgment interest - Motion to dismiss Judge(s) Concurring: Carlson, P.J., Lamar, Pierce and King, JJ. Non Participating Judge(s): Randolph, J. Concur in Part, Dissent in Part 1: Kitchens, J. Concur in Part, Dissent in Part Joined By 1: Waller, C.J., and Chandler, J. Procedural History: Bench Trial Nature of the Case: CIVIL - DOMESTIC RELATIONS |
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| Trial Court: |
Date of Trial Judgment: 05-08-2008 Appealed from: Jones County Chancery Court Judge: Franklin C. McKenzie, Jr. Disposition: Granted a divorce and distributed marital assets and awarded alimony. Case Number: 94-0191E |
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| Consolidated: 2010-CA-00316-SCT Deborah Gayle Thornton West v. Charles Timothy West, West Quality Food Services, Inc., Coastal Express, Inc., West Leasing Company, West Brothers Leasing Company, West Family Leasing Company, KT of Baton Rouge and West Investments, LLC; Jones Chancery Court 1st District; LC Case #: 94-0191; Ruling Date: 02/09/2010; Ruling JudgE: Franklin C. McKenzie, Jr. 2009-CA-01877-SCT Deborah Gayle Thornton West v. West Quality Food Services, Inc., Coastal Express, Inc., West Leasing Company, West Brothers Leasing Company, West Family Leasing Company and West Investments, LLC; Jones Chancery Court 1st District; LC Case #: 94-0191; Ruling Date: 10/20/2009; Ruling Judge: Franklin C. McKenzie, Jr. 2002-IA-01158-SCT Deborah Gayle Thornton West v. Charles Timothy West; Jones Chancery Court 1st District; LC Case #: 94-0191; Ruling Date: 07/08/2002; Ruling Judge: Franklin C. McKenzie, Jr. | ||
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Charles Timothy West, West Quality Food Services, Inc., Coastal Express, Inc., West Leasing Company, West Brothers Leasing Company, West Family Leasing Company and West Investments, LLC |
TERRY L. CAVES
JERRY D. SHARP
MARK A. NELSON
JAMES ROBERT SULLIVAN, JR.
JARED W. EASTLACK |
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| Appellee: | Deborah Gayle Thornton West | PATRICK F. MCALLISTER | ||
| Appellee #2: | ||||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contempt - Periodic alimony - Material change in circumstances - Equitable distribution - Restrictions on transfer agreements - Life insurance - Financial status - Loans - Sale of stock - Prejudgment interest - Motion to dismiss |
| Summary of the Facts: | When Charles Timothy West and Deborah Gayle Thornton West divorced in November 1994, their property settlement agreement required Tim to pay child support and to make “bi-weekly periodic payments of one-half of [his] income” as alimony. Debbie was also “entitled to and shall be vested with one half (½) of all existing marital assets.” At the time of the divorce, Tim was employed by West Quality Food Services, Inc. He owned stock in West Quality and Coastal Express, Inc., and he held limited partnership interests in West Leasing Company, West Brothers Leasing Company, and West Family Leasing Company. All of these entities are closely-held family businesses. After five years had passed, relying on advice of counsel, Tim reduced his alimony payments according to calculations provided by West Quality’s accounting firm. Debbie filed a contempt action, and Tim counterclaimed. The chancellor entered an interlocutory judgment, finding that Tim and Debbie never actually had reached an agreement on alimony and division of property, and that the issue should be presented to the court anew. Debbie filed an interlocutory appeal. The Supreme Court held that the portion of the Agreement titled “Support and Division of Income for Wife” was ambiguous, and resolved the ambiguity by finding it awarded Debbie periodic alimony. The Court remanded for a determination of whether there had been a material change in circumstances that warranted the reduction. After remand, Debbie filed an amended complaint, adding the West Entities as defendants, claiming they had conspired with Tim to deprive her of her portion of distributions to Tim by disguising the distributions as “loans” from Coastal Express and West Quality. The chancellor dismissed the West Entities as parties and, finding Debbie had no reasonable basis to pursue a claim against West Entities, ordered Debbie to pay their attorneys’ fees. Tim and the West Entities appealed, and Debbie cross-appealed. While the appeal was pending, Debbie filed discovery requests on the issue of the West Entities’ attorneys’ fees. The chancellor ordered Debbie to pay $41,063.71 in attorneys’ fees. He later reduced the amount to $33,366.71, from which Debbie has filed a separate appeal. Debbie attempted to collect her judgment for past-due alimony and attorneys’ fees by filing a writ of execution on Tim’s distributions from, and shares of stock in, West Quality and Coastal. Tim and West Quality responded with motions to stay, dismiss, or quash the writ, pointing out the prohibitions in the West Quality bylaws and stock agreement. The chancellor stayed the writ of execution and requested briefs on the effect of the restrictions. Meanwhile, the corporation demanded repayment of the loans they had made to Tim. Tim sold his West Quality stock back to West Quality for $1,552,804, and his Coastal stock to back Coastal for $87,953. West Quality retained the bulk of the stock-sale proceeds – $1,172,205 – in satisfaction of Tim’s debt. As a result of the stock sale, the chancellor denied Debbie any relief on her writ of execution, finding it was nullified by his previous stay order and the stock sale. Debbie appealed. |
| Summary of Opinion Analysis: | Issue 1: Periodic alimony Upon remand, Tim argued a reduction in his income justified a corresponding reduction in alimony. But the chancellor refused to consider any reduction in alimony. Tim argues that the chancellor should have considered and applied the Armstrong factors to his request for reduction of alimony. While it is true that property settlement agreements are, in many respects, enforceable contracts, they do not trump a chancellor’s obligation to decide alimony, property-division, and child-support issues based on established legal principles. In this case, the Agreement’s alimony provision served as a guideline for the chancellor to determine appropriate alimony. But when the Agreement was incorporated into the final divorce decree, its alimony provisions became an enforceable court award of periodic alimony, subject to modification upon a proper showing of a material change in circumstances. Periodic-alimony awards are based on need and ability to pay – not contract law. Thus, the case is remanded for a determination of whether a material change in circumstances exists and, if so, whether it merits a change in the chancellor’s award of periodic alimony. Issue 2: Equitable distribution Under the Agreement’s “Division of Marital Property” language, Tim agreed – and the chancellor approved – the following provision: “It is the intention of the Husband and the Wife to benefit and to share equally the employment and business income of Husband . . . . Husband acknowledges, and it is the intention of both parties to make a present transfer to Wife of a one-half (½) vested equitable ownership interest in said properties [referring to marital assets, including, but not necessarily limited to, stocks, limited partnerships and business assets] as a division of marital assets, while married, and this Agreement constitutes an existing equitable lien to the Wife of one-half (½) of said properties.” Unlike periodic alimony, this provision divided the Wests’ property as it existed at the time of the divorce. It is not subject to change. Tim argues that, because the provision does not include or mention the word “distribution,” the chancellor erred by finding that Debbie was entitled to half of his distributions from the entities that existed at the time of the divorce. Tim cannot credibly argue that he did not intend to transfer to Debbie an equitable interest in all of the business interests he held at the time the agreement was signed. These business interests included his stock and his ownership in the limited partnerships. An equitable title provides a “beneficial interest” in property. A “beneficial interest” can be nothing less than an interest in the benefits. And since distributions to stockholders and owners are a benefit, the chancellor was not manifestly wrong in holding that Debbie was entitled to her share of the distributions. Issue 3: Restrictions on transfer agreements Tim argues that, because of transfer restrictions, the chancellor should have voided the Agreement’s provisions that purported to transfer to Debbie an interest in his stock. The Agreement clearly recognized that Tim would remain the legal owner of the stock, but it just as clearly announced Tim’s intent to grant Debbie half of every benefit that resulted from his ownership interests in the businesses. Tim provides no reason why the restricted nature of his stock prevents him from dividing the financial benefits of the stock with whomever he pleases. Because Debbie’s claim is to an equitable interest in – not legal title to – Tim’s stock and business interests, Tim’s transfer of an equitable interest in his business holdings was valid, binding, and enforceable. Issue 4: Life insurance The Agreement, referencing a life-insurance policy with Franklin Life Insurance Company, provides that Tim and Debbie would each pay half of the $260 monthly premium. Tim stopped paying the premiums and allowed the accumulated cash value to pay the premiums. Also, Debbie withdrew some cash value without Tim’s consent. These decisions were contrary to a provision in the Agreement that prohibited use of cash value, absent agreement of both parties. The chancellor mistakenly held that – because the Agreement did not provide what would happen if one party withdrew cash value without the consent required by the Agreement – Debbie did not violate the Agreement by withdrawing cash value without Tim’s consent. However, the chancellor fashioned a reasonable and equitable remedy whereby Tim is required to obtain a term-life policy with the same premium required by the Agreement. This was not an abuse of discretion. Tim argues that chancellor should have held Debbie in contempt for withdrawing part of the life-insurance cash value without his consent. Both Debbie and Tim violated the Agreement by wrongfully withdrawing cash value. The chancellor may, at his discretion, revisit this issue on remand. Issue 5: Financial status The chancellor stated in his findings of fact that “Tim has the duty to keep Debbie informed of his financial status as required by the Agreement and that he has breached that duty.” Tim argues that the chancellor provided no basis for this statement and holding. Nothing in the chancellor’s findings of fact or orders establishes when or how Tim breached his duty to provide financial information. Tim is entitled to know what facts support a finding that he breached his obligation under the Agreement. Issue 6: Loans Debbie argues that her equitable interest in Tim’s stock entitled her to half of certain constructive distributions West Entities made to Tim, or for his benefit. The chancellor applied the Alterman factors and examined all the evidence, including testimony from three lay witnesses about the transfers and their legitimate purpose, as well as the testimony of a certified public accountant who provided unrebutted evidence of the companies’ financial practice and history of making similar loans – a practice whose origin predated the divorce by several years, eliminating the possibility that the loans were manufactured to deprive Debbie of her interest – an interest not created until years later. The chancellor’s decision was supported by substantial evidence. Issue 7: Sale of stock It is uncontested that, when she served the writs of execution on West Quality and Coastal, Debbie held a valid, enrolled judgment against Tim for which no supercedeas bond was filed. So at the time the writs were served, Debbie was a judgment creditor. So when Debbie served the writs, she was entitled to execute on Tim’s “stock, shares and interest” in both West Quality and Coastal, and her right to the proceeds to satisfy her judgment was and is a matter of the law of priority of liens. This issue was never addressed by the trial court. Upon receipt of service of the writs, West Quality and Coastal had the statutory duty to deliver “a written statement in writing, under oath, of the particulars demanded by the officer, and of the value of the defendant’s stock, shares, or interest. . . . .” They never did. Instead, they filed motions to quash the writs, and then purchased Tim’s stock, paying in excess of $1.6 million, all of which they continued to hold during the proceedings. This matter is remanded for the chancellor to review the facts and apply the law of priority of liens. Issue 8: Prejudgment interest On remand, the chancellor awarded Debbie $570,792 in past-due alimony and simple interest at seven percent per annum. Tim argues that the chancellor should not have granted Debbie prejudgment interest on her alimony award, because the amount was disputed. Prejudgment interest may be allowed in those cases where the amount due is liquidated when the claim is originally made or where the denial of a claim is frivolous or in bad faith. Additionally, it is settled beyond question that, after alimony has accrued, there is a vested right thereto, and that interest is allowed thereon. Thus, it is clear that Debbie is entitled to an award of prejudgment interest on the past-due alimony. Issue 9: Motion to dismiss Debbie argues that the chancellor erred in granting the West Entities’ motion to dismiss and their motion for attorneys’ fees. The chancellor did not err in awarding fees for services performed before Debbie filed or served the complaint officially joining the Entities as parties, because the West Entities incurred attorneys’ fees for producing numerous documents in response to subpoenas issued by Debbie in 2005, and they continued to incur fees because of Debbie’s motion to amend her complaint in September 2005. |
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