COA Affirms Trial Court Decision that Defendants Conspired to Defraud Plaintiff Wife | Speaker Law
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COA Affirms Trial Court Decision that Defendants Conspired to Defraud Plaintiff Wife

Posted on Thursday, May 17, 2018

To understand these three inter-related appeals, Cassidy v Cassidy and Hansen, No. 328004No. 328024 and Cassidy v Cassidy, No. 333319, we first must state the facts of this not-so-simple divorce matter. Joy and Robert Cassidy were married in 1997. Joy filed for divorce from Robert in 2012 after confirming that Robert had been having an affair with Mary Hansen. During the course of the affair, Robert gave Hansen over $300,000 to remodel her East Ellen Street house. By the time of the trial, Robert decided the money was a “loan.”

Much of the trial focused on whether Robert and Hansen, named as a defendant, conspired to defraud Joy of her share of the marital estate. While Robert agreed that the money should be considered part of the marital estate, he denied he and Hansen acted together to thwart Joy’s share of the family money. Joy claimed to be ignorant of the family’s financial situation.

After 15 days of trial, Genesee Circuit Court Judge F. Kay Behm found that Robert and Hansen conspired to defraud Joy of her right-full share of the marital estate. She ordered that a constructive trust existed over East Ellen Street home.

Three Appeals Resulted:

No. 328004 - Hansen appealed the judgment of divorce claiming that the trial court erred in failing to grant Hansen a summary disposition on Joy’s claim under the Uniform Fraudulent Transfer Act (UFTA), arguing that:

  1. UFTA doesn't apply because Joy was not a creditor at the time of the transfer and there was no active concealment of assets,
  2. The court erred in denying jury request, and
  3. The court erred in ordering Hansen to pay back more than the loan amount and in placing a lien in favor of ConRadical (Robert's business) who was a non-party to the divorce. 

No: 328024—Defendant Robert appealed challenging the division of property, which included holding him responsible for substantial tax liability for under-payment of taxes, $1000 a month spousal support and an award of over $150,000 in attorney fees.

No: 333319—Defendant Robert challenged a trial court contempt order requiring to spend 10 days in jail until he paid the attorney fees.

The COA upheld the trial court’s decisions on all three appeals.

NO. 328004: Hansen Appeal

According to the COA, Hansen’s attorney led the trial court into an “unnecessary dialogue regarding what ‘cause of action’ was raised against Hansen and, once plaintiff settled on the UFTA, whether Hansen was entitled to a jury trial. Those inquiries were unnecessary, given the trial court’s express equitable power in the divorce proceeding to determine and distribute the marital estate.

The court reasoned that Hansen was properly brought into the case because:

  1. The jurisdiction of the divorce court is statutory and limited to determining the rights and obligations between the husband and wife, to the exclusion of third parties.
  2. There is an exception (Estes v Titus, 481 Mich 573 (2008)) when fraud is raised, third parties can be added if they conspired with one of the parties to defraud the other spouse of a property interest.
  3. Although Hansen was brought into the case involuntarily, the court, after reviewing Wiand v Wiand,178 Mich App 137 (1989), and Thames v Thames, 191 Mich App 299 (1991), found that the trial court may “adjudicate the rights of third parties even when they are not named as parties” due to the deliberate hiding of marital assets from one of the spouses.

The court also decided that Hansen had no right to a jury trial writing: “Given that a trial court may adjudicate the rights of third parties even when they are not named as parties, as in Donahue [v Donahue, 134 Mich App 696; 352 NW2d 705 (1984)] and Wiand [v Wiand,178 Mich App 137; 443 NW2d 464 (1989)], it follows that there is no right to a jury trial when the third party has been named as a party.”

And, finally, Hansen argued that the court erred in placing a lien on the East Ellen home that included the $364,000 she “borrowed” from Robert and the $70,000 she received from ConRadical. The trial court determined the funds were Robert’s wages and part of the “loan” received by Hansen and thus part of the marital estate.

In this well-reasoned opinion, the trial court decisions in both appeals NO: 333319 (contempt of court) and NO: 328024 (challenges to the distribution of the marital estate) were affirmed and plaintiff may tax costs.

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