Divorce Judgment Replete With Errors Must Be Vacated, Remanded For Proper Analysis

In this divorce action, the Michigan Court of Appeals ruled the trial court erred in its award of spousal support and attorney fees to the plaintiff ex-wife, and also erred by failing to consider Michigan Supreme Court case precedent when dividing the parties’ life insurance policy.

According to the Court of Appeals in Labrie v Labrie (Docket No. 344339), the Lapeer County Circuit Court made numerous mistakes throughout the divorce proceedings, including:

• not articulating whether it was awarding periodic or in gross spousal support.

• not considering whether the plaintiff should have been awarded permanent support.

• not looking to established case precedent when dividing the life insurance policy.

• not considering MCR 3.206(D)(2)(a) when awarding attorney fees.

“Overall, this Court is not convinced that the spousal support award was created with equity in mind,” the Court of Appeals wrote. “It is clear that the trial court’s spousal support award has multiple issues that require further examination.”

Therefore, “[w]e vacate the portions of the amended judgment of divorce pertaining to spousal support, the division of the life insurance policy, and attorney fees, and remand for further proceedings consistent with this opinion,” the Court of Appeals held.

Judges David H. Sawyer, Colleen A. O’Brien and Anica Letica were on the panel that issued the per curiam unpublished opinion.

Facts

The plaintiff and the defendant were married in October 1995. When the couple divorced in 2018, the plaintiff was 58 years old and the defendant was 65 years old. The parties have two children, one of whom was a minor at the time of the divorce.

The plaintiff left her nursing job when she married the defendant. The defendant worked as a millwright for an automobile company. During the marriage, the plaintiff was solely responsible for raising the children, including home-schooling both kids, and for taking care of the parties’ domestic affairs. At age 49, the defendant was diagnosed with non-Hodgkin’s lymphoma and the plaintiff cared for the defendant until his lymphoma went into remission. Although the defendant returned to work for a short period of time after remission, he decided to retire early. At the time of their divorce, the parties were living solely on the defendant’s pension and Social Security payments, which totaled about $3,200 each month.

The plaintiff filed for divorce based on the defendant’s abusive behavior toward her throughout the marriage. She moved out of the marital home in March 2017. The plaintiff reportedly attempted to obtain a personal protection order (PPO) against the defendant at some point during their marriage, but it is unclear whether the PPO was actually ordered. However, the plaintiff did successfully obtain a civil restraining order against the defendant.

In its June 2018 divorce order, the Lapeer County Circuit Court held: “The [c]ourt finds the amount that has been agreed to by the parties, $750 a month, is an appropriate amount [of spousal support]. And the [c]ourt will award that for two years. … [H]alf of [the life insurance policy] is awarded to the plaintiff. The other half I’m going to award to the plaintiff [as] alimony in gross; and therefore, the defendant won’t have to pay $750 a month. We’re going to award the entire insurance policy to the plaintiff, $38,000, and that is going to include whatever share of it is hers and alimony in gross. And that will allow the defendant to have his full income of about $3,200 a month to survive on, and yet the plaintiff will have in effect the amount of spousal support, the extra $19,000 to help her get on her feet, refresh her degree, do whatever she’s got to do.”

The plaintiff appealed.

Spousal Support

On appeal, the plaintiff argued the trial court erred by failing to clearly state whether the spousal support award was periodic or in gross and by not awarding her permanent spousal support.

“We agree that the trial court erred by failing to articulate whether it intended to award periodic spousal support or spousal support in gross and find that the trial court did not properly consider applicable facts and law pertaining to the spousal support award, including whether plaintiff should have been awarded permanent spousal support,” the Court of Appeals stated.

In its analysis, the Court of Appeals said it was difficult to determine whether the trial court intended to award the plaintiff periodic spousal support or spousal support in gross. “The trial court complicated the issue by first stating that it would award plaintiff a spousal support award of $750 per month for two years. In what appears to be an attempt to allow defendant to forgo paying plaintiff spousal support in the amount of $750 per month, the trial court chose to grant plaintiff an award of $19,117.75, which was the monetary equivalent of defendant’s share of the $38,000 life insurance policy. In explaining its ruling, the trial court attempted to clarify that the lump sum it intended to award to plaintiff, purportedly as alimony in gross, was approximately equivalent to two years of periodic spousal support payments of $750 per month. Thus, it appears that the trial court was attempting to create a single resolution for both the spousal support issue and the issue of dividing the life insurance policy between the parties by relabeling the share of the life insurance policy that otherwise would have been awarded to defendant in the division of marital assets as ‘spousal support,’ and granting it to plaintiff in lieu of making a separate spousal support award.”

According to the Court of Appeals, the trial court misstated the spousal support award and miscomprehended the characteristics of each type of spousal support. “On remand, the trial court is to fully clarify whether it intended to award periodic spousal support or spousal support in gross. In the event that the trial court intended to award spousal support in gross, it should make an administrative correction to the amended judgment of divorce indicating that the award of spousal support in gross is nonmodifiable and not taxable to plaintiff, the payee.”

Meanwhile, the plaintiff also argued that, no matter whether spousal support was intended to be periodic or in gross, the trial court erred by not awarding her permanent spousal support. “Although it is unclear whether the trial court intended to award periodic spousal support or spousal support in gross, it is obvious that neither award constitutes permanent spousal support,” the Court of Appeals explained. “This Court reviewed the record and concludes that the trial court failed to make factual findings or made incorrect factual findings and incorrect conclusions of law that merit reconsideration of the spousal support award.”

Overall, the Court of Appeals said it was not convinced the spousal support award was equitable. “In light of the errors discussed herein, we vacate the trial court’s spousal support award and direct the trial court to enter a new spousal support award of an appropriate monetary amount and duration in accordance with applicable law pertaining to the factors to be considered, the imputation of income, and the ‘general principles of equity.’”

The Court of Appeals further noted the trial court failed to refer the case to the Friend of the Court for a spousal support calculation. “On remand, the trial court should refer the case to the Friend of the Court and consider the Friend of the Court’s spousal support calculation when crafting its own spousal support award.”

Life Insurance

The plaintiff also argued that if the trial court had awarded her periodic spousal support, then it erred by failing to award her the total cash value of the life insurance policy in the division of the parties’ marital property.

Alternatively, the plaintiff claimed that if the trial court had awarded her spousal support in gross, then it properly awarded her the full cash value of the life insurance policy but abused its discretion by failing to also award her permanent periodic spousal support.

Again, the Court of Appeals pointed out it was unclear whether the trial court intended to award periodic spousal support or in gross spousal support. By not separating the spousal support award from the distribution of the life insurance policy, the trial court “has made it difficult to discern whether either issue was analyzed properly and equitably,” the Court of Appeals wrote. “In the event that the trial court intended to grant periodic spousal support, and mistakenly awarded spousal support in gross, then it is clear that the trial court made no effort to equitably divide the value of the life insurance policy by making factual findings pursuant to the factors set forth in Sparks [v Sparks, 440 Mich 141 (1992)]. The trial court made no factual findings under Sparks when dividing the life insurance policy at all. Thus, this Court cannot analyze whether the life insurance policy was properly divided between the parties.”

Therefore, “when the trial court clarifies on remand whether it intended to award periodic spousal support, then it should also analyze the distribution of the life insurance policy as marital property by making appropriate factual findings under Sparks and determining whether the policy was properly subject to division despite its status as separate property,” the Court of Appeals instructed.

Attorney Fees

The Court of Appeals further held that the trial court granted the plaintiff an inadequate amount of attorney fees and failed to properly analyze her claim for fees under the applicable court rule, MCR 3.206(D)(2)(a).

“When ordering attorney fees, a trial court should assess the facts of the individual case and determine ‘whether, under the circumstances, [the party] would have to invade the same spousal support assets she is relying on to live in order to pay her attorney fees,’” the Court of Appeals stated. “There is no evidence that the trial court made such an analysis herein. Rather, it appears that the trial court attempted to award attorney fees in an effort to balance the amount of money that the parties would receive in the division of assets. The trial court noted that there was a ‘disparity in the amount between the defendant’s IRA and the plaintiff’s IRA,’ and tried to remedy the disparity by awarding plaintiff $4,000 in attorney fees. However, ‘[t]he trial court may not award attorney fees, as apparently occurred here, solely on the basis of what it perceives to be fair or on equitable principles.’”

The Court of Appeals noted that, although the plaintiff owed $14,000 in attorney fees at the time of trial, there was uncertainty regarding whether she could have paid some of those fees. “Plaintiff ‘borrowed’ $23,000 from her father, including $6,000 for the payment of attorney fees. It is unclear whether plaintiff is expected to reimburse her father for the $6,000 used to pay attorney fees, why she sought the specific amount of $5,000 from defendant, and how much she currently owes in attorney fees. These factors are important to a proper determination of an attorney fee award.”

Under the facts and circumstances, “it is apparent that the trial court abused its discretion by failing to award plaintiff the full amount of attorney fees requested and failing to properly consider the evidence presented pursuant to MCR 3.206(D)(2)(a),” the Court of Appeals held. “Accordingly, we vacate the portion of the amended judgment of divorce concerning attorney fees. On remand, the trial court is to consider the appropriate amount of attorney fees to award plaintiff.”