Appeals Court: Trial Court Must Re-Examine Dissipation Of Marital Assets Issue

The Michigan Court of Appeals, in this divorce action, affirmed the discovery sanctions that were imposed but remanded the case for the trial court to address various issues surrounding the dissipation of marital assets.

In Cammenga v Cammenga (Docket No. 358463), the plaintiff, Stacey Cammenga, and the defendant, Michael Cammenga, divorced after more than 25 years of marriage. The parties have two adult children together. The divorce proceedings were contentious.

Relevant to this appeal, the Barry County Circuit Court entered a status quo order limiting the parties’ spending to their “past practices” and prohibiting Michael from spending money on the woman alleged to be his mistress. When both parties accused the other of violating the status quo order, the trial court ruled their violations resulted in a “wash” and neither party would be credited for the other’s improper spending. In addition, “extensive pretrial litigation” took place related to Michael’s “untimely and incomplete” responses to certain discovery requests. The trial court ultimately sanctioned Michael by prohibiting the use of business documents that he had not provided Stacey.

After a three-day bench trial, the trial court placed detailed findings on the record addressing the division of the marital estate and the dissipation of assets, among other things. When both parties filed motions for reconsideration and clarification, the trial court placed additional findings on the record. Thereafter, Michael appealed the trial court’s decision. Stacey cross-appealed.

In a 19-page opinion, the Court of Appeals remanded the case for further proceedings “related to the overall value of the marital estate.” Remand was required, the appellate panel said, because the trial court “failed to make adequate factual findings as to whether Stacey dissipated the marital estate, violated the status quo order, or both.”

As for the discovery sanctions that were imposed, “Michael … has not shown that the trial court clearly erred by concluding that he had not complied with discovery,” the Court of Appeals held.

Court of Appeals Judges Michael J. Kelly, Kathleen Jansen and Thomas C. Cameron were on the panel that issued the unpublished opinion.

Discovery Sanctions

On appeal, Michael argued the trial court improperly prejudged his credibility during the discovery proceedings. The Court of Appeals rejected this argument, saying the “record belies his assertion.”

The “most significant” discovery issues, the Court of Appeals explained, involved Stacey’s requests for business documents from Cammenga Investments, LLC, a company that Michael owned and which he used, in partnership with other entities in which he had an interest, to purchase a papermill.

“Michael’s complaints about the trial court’s discovery determinations and his claim that the court formed unfairly negative opinions about him or treated him harshly during discovery are spurious,” the Court of Appeals stated. “The [trial] court showed considerable patience and forbearance in the face of Michael’s repeated failure to comply with discovery. Indeed, the court’s discovery sanction was eminently fair. … Nevertheless, Michael contends that the court’s pretrial discovery rulings resulted in a ‘prejudgment’ of the case, such that the subsequent trial proceedings were tainted. … Nothing in the trial court’s statements or discovery rulings evinces a deep-seated favoritism or antagonism that would make fair judgment at trial impossible.”

Moreover, to the extent the trial court held that “Michael had misrepresented the facts by asserting that he was a ‘little’ person with no access to documents,” this finding “was supported by the record, which showed that, through his corporations, Michael owned 25% of the LLC that owned the papermill, that he worked at the papermill, and that he was intimately involved in the business’s dealings,” the Court of Appeals explained. “Further, insofar as the trial court considered Michael’s conduct during discovery as a factor when valuing the business and dividing assets, this was not improper.”

Therefore, “Michael’s complaints regarding the discovery proceedings as an improper ‘prejudgment’ of the case are without merit,” the Court of Appeals said.

Dissipation Of Assets

On appeal, both parties raised various challenges to the trial court’s division of marital property. In particular, Stacey argued the trial court wrongly used her spending while the status quo order was in place to offset Michael’s dissipation of assets during the same timeframe.

“Stacey maintains that Michael was the only one who engaged in dissipation of marital assets and that the court erred by failing to take punitive measure against him to compensate her for the dissipated assets,” the Court of Appeals observed.

Addressing this assertion, the Court of Appeals noted the trial court ruled that Michael had engaged in the dissipation of marital assets, finding that he purchased a home with his mistress and placed the home in her name although the two had bought it together. “The [trial] court specifically rejected Michael’s claim that he was simply a tenant paying ‘rent’ to a landlord. Stacey also presented evidence that Michael spent marital funds improving his new house with his mistress, ‘wining and dining’ his mistress, buying supplements to enhance their sex life, and taking trips with his mistress. The trial court credited Stacey’s evidence and concluded that Michael had improperly spent $22,735 on his mistress. Given the evidence presented, the court did not clearly err by concluding that Michael had engaged in improper spending, i.e., dissipation of marital assets.”

The trial court’s findings also supported the conclusion that Michael’s improper spending constituted a violation of the status quo order, the Court of Appeals observed. That order “contained provisions requiring Michael to continue to deposit his income and expense reimbursements into the marital accounts. Thus, by continuing to spend funds on his mistress, and by failing to deposit funds in marital accounts, Michael dissipated marital assets and he violated the status quo order. These funds should have been recaptured for the marital estate.”

However, rather than recapturing the dissipated assets and undeposited income for the marital estate, the trial court “offset” Michael’s dissipation of assets with Stacey’s spending, the Court of Appeals pointed out. “The trial court … did not make any findings as to whether the other allegedly improper expenses were, in fact, improper expenses.”

Further, the Court of Appeals said the trial court failed to address the $15,000 Stacey gave to the parties’ son, before the status quo order was entered, which Stacey testified was a repayment of money that she and Michael took from the son’s bank account in 2017. “Stacey also testified that a payment to her mother was a repayment of money that Stacey borrowed from her parents during the pendency of the divorce case when Michael emptied their account, leaving her with no money to pay bills. If Stacey’s testimony is credited, this would not constitute dissipation of assets. …Yet, the trial court made no factual findings regarding these amounts to support whether they constituted dissipation of assets or legitimate payment of debts and marital expenses.”

According to the Court of Appeals, “factual questions” existed regarding whether Stacey’s expenditures constitute a dissipation of marital assets or a violation of the status quo order or both. Therefore, “we remand with instructions that the trial court make factual findings, on the existing record, regarding Stacey’s spending to determine whether Stacey dissipated assets or violated the status quo order or both. … If the trial court’s fact-finding results in the elimination or reduction of the offset for Stacey’s spending, the property award should be adjusted accordingly.”