Divorce Law Journal

Atkisson v. Atkisson, Ky COA, Marital and Nonmarital Property, Fees, Temporary Maintenance, Garnishment and Judgment Lien

Atkisson v. Atkisson and Atkisson v. Atkisson (consolidated appeals, separate opinions) ___S.W.3d____ (Ky App. 2009) and ___S.W.3d____(Ky App. 2009)

Husband appealed the trial court’s division of marital property, award of temporary maintenance, award of attorney fees, and denial of relief to quash garnishment writs and judgment lien.

Marital residence:     Court awarded husband the residence, but awarded all the equity in the residence to the wife as her non-marital property.  Husband argued that the court should have apportioned the equity as set out in Brandenburg.  COA found that while there was marital equity in the residence, even if the husband was credited for that amount, there was insufficient equity to fully reimburse the wife for her non-marital contribution.  Therefore, there was no marital equity to divide under Brandenburg.

Timeshare:    The court ordered that the timeshare be sold.  Wife was to receive $1,522.88 of the proceeds as her non-marital property.  The remaining proceeds were to be divided equally.  Husband argues that the court erred in not taking into consideration the debt associated with the timeshare, which the court assigned to husband.  COA found that debt is part of the current mortgage on the marital residence.  The court deducted the full amount of both mortgages from the value of the residence to determine the equity in the property.  As a result, the court properly considered the debt. 

Temporary maintenance:      Court ordered husband to pay wife temporary maintenance of $2500 per month.  The order included a provision for health insurance and car insurance.  Husband argued that the award was excessive and that wife intentionally remained unemployed.  COA found the trial court had imputed wife with income in calculating temporary maintenance and found no basis to disturb the trial court’s judgment. 

Attorney fees:    Trial court awarded wife $10,000 in attorney fees.  Husband argued that wife not entitled to any fees due to the amount of assets wife received in the judgment.  COA found no abuse of discretion.  Wife only awarded half of the fees she asked for, husband retains a higher earning capacity, and husband received the residence and most of the income producing property. 

Writs of garnishment and judgment lien:  After the trial court ruled on the parties CR 59.05 motions, wife filed non-wage garnishment against three of husband’s accounts and a judgment lien against his real property.  Husband moved to quash the writs and lien as premature, but trial court denied the motion.  COA found that the garnishment writs and judgment lien were not filed prematurely.  The court’s judgment stays in effect until modified, although enforcement is stayed under CR.62.01.  When compliance dates have passed by the time the court denies a CR 59.05 motion, the trial court should allow a reasonable amount of time for the obligor to comply with the original order.  Here, a reasonable amount of time was given. 

Wife’s garnishment of tax-deferred accounts resulted in 10% penalties for early withdrawal, plus taxes and fees.  COA found that the garnishment writs subjected husband to penalties that far outweighed his failure to comply with the court’s orders.  The penalties and taxes imposed on husband changed the overall allocation of marital assets.  COA remanded this issue to the trial court for a determination of the amount of penalties and taxes incurred and an allocation of this amount between the parties. 

    Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Rearden v. Rearden, Ky COA, Classification Of Property, Attorney Fees

Rearden v. Rearden, __ S.W.3d __ (Ky. App. 2009)

 

The parties divorced after approximately 6 months of marriage.  No children were born during the marriage.  Thus, the primary issues at trial and on appeal concerned the classification of assets as marital or non-marital property:

 

Down payment on marital residence:  The trial court classified the husband’s pre-wedding down payment of $3000.00 from his personal money market account on the marital residence as marital.  Following the Source of Funds Rule, the COA found that the down payment was an identifiable portion of the purchase price and it was made by the husband prior to the wedding.  However, the husband could not trace the $526.87 refund received from the down payment during the marriage as a result of calculations in the closing documents.  COA held that $526.87 refund was marital property and that the remaining $2473.13 was husband’s non-marital property.

 

The treadmill, dining room suite, and bed/mattress:  The trial court classified these items as marital property since the husband could not sufficiently prove they were purchased with his non-marital funds.  COA agreed. Husband purchased the items with his personal credit card, but paid some of the credit card transactions using funds from the parties’ joint account.  The fact that the wife did not challenge husband’s testimony that he used non-marital funds to buy the items does not equate to an admission by the wife.  Husband still had to meet his burden of proof. 

 

Husband’s military retirement benefits:  The trial court found that since the parties were married for 2 months of husband’s 270 months of service credit, wife was entitled to $8.08 per month for the remainder of husband’s life.  Instead of requiring the husband to make such a small monthly payment to the wife, the court ordered husband to pay the wife a lump sum of $3000.  The court did not give an explanation of how it arrived at the lump sum amount.  COA agreed that the wife would be entitled to $8.08 per month for the rest of the husband’s life and that the trial court had discretion to convert the payments to a lump sum.  COA reversed and remanded for an explanation of how the court arrived at $3000.00 as a fair calculation of the wife’s future interest. 

 

The final issue on appeal concerned whether the trial court erred in not awarding the husband attorney fees after finding the wife to be in contempt of court more than once.  COA affirmed, finding that the trial court is not authorized to consider any other factors beyond the financial positions of the parties when awarding attorney fees.  COA also noted that the husband was awarded attorney fees in the companion appeal, specifically addressing the finding of contempt. 

 

Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Fixed Fees for Divorce (Updated)

I have followed with interest the mounting clamor for fixed fees in divorce cases. I loved North Carolina attorney Lee Rosen’s quote in an ABA Journal e•report, “If someone at Lockheed can put a price on a jet, a lawyer can put a price on a case – the variables they deal with are so much more complicated than those we deal with… We should be expert enough in our areas of law so that we can do it.” After many years I cannot predict with much accuracy. How do you know after one interview whether the client or spouse has good records or any records tracing that nonmarital interest? You have never met the spouse and probably don't know who is representing him/her so it is virtually impossible to gauge whether the case will proceed with open and forthright discovery and a cooperative sense of collegiality or whether you will be in court often and taking many depositions. How to know whether this is the case that will have a child related issue after every exchange of the children? What we can do, however, is spread the risk. Under fixed fees some cases will be financial losers and others will be profitable.

Rosen’s website has a fee calculator so prospective clients who answer a few questions can find the range for legal fees they would pay his firm. Once the few simple questions are answered “yes” or “no,” a range of fees can be found for cases that settle without filing a lawsuit and a separate range can then be accessed for litigation fees. The actual fee, of course, is set in a meeting with the client because the web based calculator cannot cover all scenarios. The ranges were developed after Rosen lawyers analyzed five years of their cases. At first blush they appear to be a very reasonable approach.

One could quibble that the lowest fees published on the website are too high; most of us handle many cases for less than $6,000. This has the probably intended effect of discouraging calls from those who cannot afford his firm's services. For clients with a fixed fee retainer, however, $6,000 may be on spot as the hourly rate mitigates huge numbers of phone calls and emails. On the other hand, the fee calculator does not take into account complicating issues such as relocation, hidden assets, multiple businesses, legal questions of first impression, and personality disorders. Perhaps before settling on a definitive fee in the interview, the lawyer takes such matters into account.

All in all, it’s a good step in the right direction. We are in the process of analyzing our historical fees and considering whether to offer clients a fixed fee option. We could do it today and use Rosen's numbers and methodology if I could satisfy myself that those fees are fair. I would prefer to have my own basis for the numbers. Some clients would end up paying more with a fixed fee as opposed to an hourly rate and some would save money, but for those who justifiably want a sum certain, the time has come.

UPDATE: A comment from William Wilson, Indiana Family Law:
The worry about getting the fixed fee "right" stems from our brains looking at everything in terms of hours having value. If we can break that habit, then fixed fees aren't so worrisome.

An analogy (albeit a poor one) is a car: for the most part, auto makers can produce a $15,000 car in the same amount of time that they can produce a $50,000 car, yet they do not charge us based upon the number of hours that went into making the car. They charge us based upon the value of what they sell and we want to buy.

For clients, it's easier for them to say "yeah, it's worth $2,500 for me to get this divorce" than to say "I'm willing to have you put X hours into the case." The other side of the coin is the lawyer saying "the work I did was worth $2,500" or "the work I did was probably worth more than $2,500."

We all have cases where we put more time in than we thought we would, but many of those cases also end up with unpaid client bills. The end result is the same--our expectation of being paid a fair amount was not met.

But, on the flip side, there are those cases where we can quote a $2,500 fee and get it done quickly. We shouldn't feel bad about "making more" than we would have under an hourly rate--for the client, the end result is the same.

In a nutshell, hourly billing has many flaws. Some things we do as lawyers can be done very quickly, but are worth more than the time it takes to do them. It's easier for clients to understand the value of achieving a goal--like obtaining the divorce--than to understand how much time goes into doing discovery and the resulting fees based on an hourly rate.

I hope that makes sense--I haven't had my morning OJ yet.

Don't be afraid of flat fees. I've been making that move, and clients seem very comfortable with the concept. I figure I will quote the fee a little higher, and in the end, if I feel the fee was a bit high, I can always reduce it--and you can imagine how much clients will appreciate that.

Allison v. Allison, Marital/Nonmarital Propert And Debts, Attorney Fees

ALLISON V. ALLISON
DIVORCE: MARITAL/NONMARITAL CHARACTERIZATION OF PROPERTY AND DEBTS; ATTORNEY FEES
2006-CA-001967.
PUBLISHED: AFFIRMING IN PART AND VACATING IN PART AND REMANDING
PANEL: BUCKINGHAM, PRESIDING; THOMPSON AND HENRY CONCUR
COUNTY: FAYETTE
DATE RENDERED: 02/15/2008
Ex-Husband appealed from TC’s orders relating to marital/nonmarital nature of his family's business, the marital/nonmarital nature of a $66,714 debt allegedly owed by Ex-Wife to her mother, and the award of attorney and expert witness fees.

Ex-Husband and Ex-Wife were married on September 5, 1986. In the early 1970's, Ex-Husband's mother and father acquired all stock in an office-supply business. Ex-Husband owned all shares of stock in the business at the time of trial, which he claimed to be his nonmarital property. He claimed that prior to the marriage he entered into an agreement that gave him an 8% interest in the business in exchange for a promissory note from him for $32,000. Ex-Husband never paid the note, and TC found that his father had forgiven the debt. Ex-Husband contended that he owned this portion of the outstanding business shares as his nonmarital property because the forgiveness of the debt constituted a gift to him. Alternatively, he contended that this ownership interest is his nonmarital property because he acquired it before marriage.

As to the remaining shares of corporate stock, during the marriage, there was a stock redemption agreement between Ex-Husband's parents and the corporation whereby the parents sold their 84,800 shares of stock to the corporation for a sum that was paid to them over a ten-year period by corporate earnings. Ex-Husband claimed that these shares were also his parents' gift to him and that he never paid any money, from marital funds or otherwise, for the stock.

Ex-Husband ultimately argued to CA that he had at least an 8% nonmarital interest in the business due to the forgiveness of the payment for the stock by his father, citing KRS 403.190(2)(a) which expressly excludes property acquired by gift from the definition of “marital property” unless “there are significant activities of either spouse which contributed to the increase in value of said property and the income earned therefrom.” Alternatively, Ex-Husband stated that the 8% interest is nonmarital because it was acquired before marriage.

CA provided that if Ex-Husband acquired his ownership interest in exchange for the note, and that indebtedness was later forgiven, then the forgiveness of the indebtedness would be a gift to Ex-Husband and would constitute a nonmarital interest in the corporation. CA thus vacated TC’s determination that Ex-Husband did not have a nonmarital interest in the corporation and remanded the matter for TC to determine the extent of Ex-Husband's interest prior to the redemption agreement and whether such interest was marital or was proven by Ex-Husband to be nonmarital as a result of a gift or nonmarital as having been acquired before marriage.

CA further noted that if, on remand, TC determined that Ex-Husband's interest prior to the redemption was marital, then any increase in ownership interest because of the redemption agreement was also necessarily marital. If TC determined that Ex-Husband's interest prior to the redemption was nonmarital, then it must determine whether any increase in value was marital or nonmarital. CA noted that, in this regard, the case was one of first impression in Kentucky.

CA recognized that under the “source of funds” rule used by Kentucky courts to determine whether property is marital or nonmarital, property is considered to be acquired as it is paid for; thus, the shares of stock sold to the corporation in the stock redemption agreement were not “acquired”, within the meaning of KRS 403.190 and the determination of marital/nonmarital interest, until they were paid for. CA found that these shares were paid for during the marriage over a period of years by corporate earnings and therefore were “acquired” during the marriage and are presumed to be marital property. Ex-Husband attempted to avoid the presumption by arguing that he exchanged his 8% interest for a 100% interest when the stock redemption occurred. CA agreed with Ex-Husband that the value of his ownership interest did not increase at the time of the stock redemption because while the percentage of ownership interest increased, the value of the corporation decreased because of the debt liability created to pay Ex-Husband's parents for their shares. However, although Ex-Husband's ownership interest at the time of the redemption of his parents' shares increased, the value of Ex-Husband's shares did not. Rather, the value of Ex-Husband's shares increased during the marriage as the corporation gradually paid the debt to Ex-Husband's parents. CA provided that if Ex-Husband had a nonmarital interest in the corporation at the time of marriage, the value of that interest likely increased in time as the years passed and the corporation paid off the debt owed to Ex-Husband's parents. CA held that to the extent the increase was due to Ex-Husband's efforts as the primary operator of the business and Ex-Wife's efforts as homemaker, it was marital property. However, to the extent the increase in value was due to general economic conditions, the increase was not marital property.

Ex-Husband's second argument was that TC erred in finding that checks from Ex-Wife's mother written to Ex-Wife after she and Ex-Husband separated constituted a marital debt. After the parties separated, Ex-Wife was awarded $2,000 per month for temporary maintenance and $1,000 for child support. Thereafter, as power of attorney for her mother, Ex-Wife wrote checks totaling $66,714 on her mother's checking account. Some of the checks were written before the maintenance and child support awards to Ex-Wife, and some were written after the awards. Of this amount, $27,300 in checks apparently were written to Ex-Wife herself for cash. Ex-Wife claimed that all the checks were loans from her mother that were needed because she could not meet her living expenses despite her maintenance award of $3,000 per month. She claimed that much of the money went for home maintenance and repair and that the remainder went for living expenses for her and her daughter. Ex-Husband was not aware of the alleged loans, and he argued that the checks were likely to be gifts from Ex-Wife's mother and that Ex-Wife's testimony that the checks were loans and the notations of “loan” on some of the checks were insufficient to prove the existence of a loan. Ex-Wife testified as to the nature of the debts and had documentation in the form of checks from her mother that supported her testimony that there was actually a loan. TC accepted Ex-Wife's claim of indebtedness to her mother based on her testimony and copies of the checks and CA concluded that the evidence was sufficient to support the determination that the checks represented loans, not gifts. However, CA held that to the extent that Ex-Wife may have used loan proceeds for her personal expenses and expenses for her child after being awarded temporary maintenance and child support, those debts should be held to be Ex-Wife's personal debts. To do otherwise would be to increase Ex-Husband's temporary maintenance and child support obligations during that period of time.

Ex-Husband's third and final argument was that TC erred in ordering him to pay 25% of Ex-Wife's attorney fees and expert witness fees because there was not an imbalance in the financial resources of the parties. Ex-husband stated that the marital property was equalized but that the majority of his assigned marital property ($1.2 million) was the family business. Ex-Wife asserted that while Ex-Husband had a salary of over $100,000 per year, as well as potentially more due to retained corporate earnings not paid by the corporation, she was 55 years old at the time, had been out of the work force for 10 years, and had only a high school education, so although the marital property was divided equally, the financial resources of the parties were not balanced due to these additional facts. Ex-Husband also correctly stated that TC made no specific finding that there was an imbalance in the financial resources of the party, but that it appeared to base its award on Ex-Husband's obstructive tactics in failing to comply with discovery requests and orders of the court. Also, Ex-Husband argued that attorney fees may be awarded pursuant to KRS 403.220 only when there is an imbalance in the parties’ financial resources, even though attorney fees may be warranted otherwise under CR 37.01 due to obstruction tactics. CA found that it was not entirely clear whether TC based its award of attorney fees under KRS 403.220 on the financial resources of the parties as well as Ex-Husband's obstructive tactics. CA found that while TC did not specifically address the parties' financial resources prior to making the award, it did cite the statute, which requires the court to consider such resources. CA held that, in light of Ex-Husband's failure to seek a more specific finding from the court, and in light of the fact that a finding of disparity in the parties' financial resources due to the parties' respective incomes was supported by the evidence, TC did not abuse its discretion in awarding Ex-Wife 25% of her attorney fees and expert witness fees.
As digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates

Jones v. Jones (Ky) Income On NonMarital Property, Increase In Value Of Nonmarital Property, Maintenance

Jones v. Jones, ___S.W.3d___ (Ky. App. 2008)

Ex-Husband appealed TC’s orders classifying his Tobacco Transition Payment Program (TTPP) payments and a portion of the increase in value of his life estate as marital and awarding maintenance and attorney’s fees to Ex-Wife in divorce proceeding.

Prior to the parties’ 18 year marriage, Ex-Husband inherited from his grandfather a life estate in a farm consisting of 215 acres. During the marriage, the parties resided in a residence located on the farm, and Ex-Husband conducted farming operations thereupon. The parties entered into a prenuptial agreement prior to marriage.

In its orders regarding division of property, TC treated future TTPP payments to be made to Ex-Husband as owner of the life estate as marital property in order to effectuate an equitable division of property. CA found that TC erred as a matter of law by classifying the TTPP payments as marital property in order to effectuate a fair distribution of property. The classification of property as marital or nonmarital is not discretionary. CA further found that TTPP owner payments should have been classified as Ex-Husband’s nonmarital property. The TTPP owner payments represent compensation from the government for the taking of the property interest in the tobacco grower’s tobacco quotas. As Ex-Husband inherited the tobacco quotas from his grandfather, they were nonmarital, and the compensation received for them is also nonmarital.

CA also found that future TTPP payments to be made to Ex-Husband as a grower of tobacco should also be classified as Ex-Husband’s nonmarital property. Finding that these TTPP payments supplant income traditionally received from the sale of tobacco, CA found these payments to be properly classified as income. As the income from the sale of tobacco would have been classified as Ex-Husband’s nonmarital property pursuant to the parties’ prenuptial agreement, the grower TTPP payments were also his nonmarital property.

TC found that the parties made substantial improvements to the farm with marital assets, thus the life estate in the farm had a marital component. TC found the actual cost of improvements to the farm totaled $67,000.00, that these improvements were paid for with marital assets, and then adjusted the $67,000 by Ex-Husband's “life estate valuation formula” and concluded the marital property interest was $44,648.00. CA noted that under KRS 403.190(2)(e), any increase in value of property acquired before marriage is nonmarital unless the increase in value is attributed to “the efforts of the parties during marriage.” CA found that TC clearly erred when it equated actual cost of improvements to the life estate in the farm with increase in value to the life estate in the farm. To properly calculate the increase in value attributed to marital improvements upon property acquired before marriage, CA provided that the court must subtract the fair market value of the property at the time of dissolution without marital improvements from the fair market value of the property at the time of dissolution with marital improvements. The difference between such fair market values yields the increase in value attributed to marital improvements upon the property. As to a life estate acquired before marriage, a party may be compensated for the increased value attributed to marital improvements thereon, not to exceed the value of the improvements. Furthermore, when determining the fair market value (FMV) of real property with improvements and without improvements, expert opinion is ordinarily necessary. To be qualified to express an opinion upon FMV of real property, a witness, including the owner thereof, must possess some basis for knowledge of market values. The mere ownership of property does not qualify a lay person to give an opinion upon market value. The actual cost of improvements may be considered as evidence bearing upon FMV but should not be the sole factor. CA noted that if the parties come to the end of their proof with grossly insufficient evidence on the value of the property involved, TC should either order this proof to be obtained, appoint his own experts to furnish this value, at the cost of the parties, or direct that the property be sold. CA directed TC, upon remand, to calculate the marital increase in value of the life estate in the farm by subtracting FMV of the farm at the time of dissolution without marital improvements from the FMV of the farm at the time of dissolution with marital improvements, then, adjust this amount by a life estate valuation formula, but in no event shall the compensation for the marital increase in value to a life estate exceed the value of the improvements thereon.

Ex-Husband also contends TC erred by awarding maintenance to Ex-Wife. As entitlement and amount of maintenance are dependent upon the marital and nonmarital property allocated to the party for a determination of whether the claimant has sufficient resources for her support, CA ruled that Ex-Wife’s maintenance award must also be vacated for reconsideration as part of the underlying property award was reversed on appeal.

Ex-Husband finally contends TC abused its discretion by awarding attorney’s fees to Ex-Wife. Based upon the apparent imbalance of financial resources between the parties, CA found no abuse of discretion in TC’s award to Ex-Wife of a portion of her attorney’s fees.

Affirmed in part, reversed in part, and remanded.
Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates.

Kentucky Bar Association v. Glidewell (KY) Disciplinary Action

Kentucky Bar Association v. Glidewell, ___S.W.3d___(Ky. 2007)

Two bar complaints were filed against Attorney. The first complaint arose because, in the course of a divorce action, Attorney failed to respond to motions, attend hearings, or communicate with her client. She failed to respond to a motion requesting that her client pay arrearages on and then keep his mortgage payments current. She also failed to attend the hearing and the court entered an order granting the motion. When her client failed to abide by the order her client’s wife filed a motion for contempt. Attorney did not respond to this motion, inform her client about the motion, or attend the hearing. As he had no knowledge of the hearing, her client also failed to attend the hearing. The court found him in contempt and issued an arrest warrant. Subsequently, the client hired new counsel and attempted to have the unused portion of his retainer refunded. However, counsel did not return his phone calls. Attorney responded to the bar complaint but did not file an Answer to the Charge when it was issued. The Board of Governors by a unanimous vote found her guilty of lack of diligence, failure to keep client informed, failure to adequately explain matter to client, improper termination, and failure to respond to an inquiry from a disciplinary authority. Attorney was suspended from the practice of law for a period of forty-five days and was ordered to pay restitution and cost.
The second complaint against the Attorney also arose out of a divorce action. At the conclusion of this divorce action the client still owed Attorney money. Therefore, she filed a Notice of Attorney’s Lien on her client’s marital residence. However, she failed to do a title search and discover that title to the home had been conveyed to her client’s parents. She had never represented his parents and they owed her no money. Client’s parents informed Attorney that they now owned the home and Attorney filed a lien release. However, she did not properly identify the property and the lien was not removed. Attorney was informed of the mistake but took no action until after the bar complaint was filed. Attorney responded to the bar complaint but did not file an Answer to the Charge when it was issued. On this Charge the Commission found her not guilty, by unanimous vote, of using means that have no substantial purpose other than to embarrass, delay, or burden a third person, and committing a criminal act.
Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates

Lane v. Caudill-Lane (KY) Custody, Supervised Visitation, and Attorney Fees

UPDATE: We were late getting this digest posted. The Kentucky Supreme Court, however, denied discretionary review and ordered that the Court of Appeals decision not be published.
Lane v. Caudill-Lane, 2007 WL 2459269

Dad appealed TC order awarding sole custody to Mom and requiring Dad’s visits to be supervised. Additionally, Dad appealed TC’s order awarding Mom attorney’s fees.
CA upheld the award of custody and attorney’s fees but overturned the supervised visitation.
CA opined, on the issue of custody, that there was sufficient evidence presented for the trial court to award sole custody. CA went on to state that an award of joint custody presumes that the parties can rise above their petty issues and do what is in the best interest of the child. A TC should not assume that because parties are antagonistic during a divorce that they will not be able to rise above it in the future. However, in the instant case, the CA reasoned that it did not appear from the record that the parties possessed the necessary emotional maturity to ensure joint custody would be in the child’s best interest.
Regarding the issue of visitation, CA held that there was not substantial evidence to warrant limiting Dad’s visitation and TC used the wrong standard in making its decision. The appropriate standard for restricting visitation is whether the visitation would “seriously endanger the child”. There was testimony presented that, among other things, Dad had called a phone sex line, that he had visited pornography websites, and that he had watched pornographic movies. However, none of this occurred in the presence of the child. There was no evidence presented that such activity would harm the child. CA stated that there may be situations in which this type of behavior would endanger a child but there was no evidence presented that Dad’s behavior would “seriously endanger the child”.
On the issue of attorney’s fees, CA held that the decision to award attorney’s fees is completely in the discretion of the TC. The only requirement is that the court consider the financial resources of the parties.
Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates

Adoptions Changes Sought, Panel Wants Safeguards For Removing Kids From Parents

Adoptions Changes Sought, Panel Wants Safeguards For Removing Kids From Parents is the title of a Lexington Herald-Leader article by Valarie Honeycutt Spears. Some quotes:

A task force studying the improper removal of children from their parents in Kentucky is for the second time asking the General Assembly to pass a reform bill.

State Rep. Darryl Owens, D-Louisville, is introducing legislation designed to put more safeguards into the process of removals by state social workers, into cases involving the termination of parental rights and into state adoptions from foster care in Kentucky.

If enacted, the bill would further protect the due process rights of parents, slightly increase accountability for the Kentucky Cabinet for Health and Family Services staff and provide increases in the fee scale for court-appointed attorneys for children and their parents.

The Cabinet's Blue Ribbon Panel on Adoption presented similar, though weaker, legislation, during the 2007 General Assembly, but it failed to become law. The task force had been led by former Secretary Mark D. Birdwhistell.

The story continues,

In Kentucky, there was no definitive word yesterday on whether there will be additional legislation filed in the 2008 General Assembly to open child protection courts, an issue that was a main focus of the Blue Ribbon panel.

Cabinet Undersecretary Tom Emberton Jr. told members of the Interim Joint Committee on Health and Welfare yesterday that regional meetings were being held across the state at the direction of Chief Justice Joseph E. Lambert to determine whether a bill should be filed.

Last week, Lambert stopped short of saying that legislation would be filed in the upcoming legislative session. But he said, "I support the concept of allowing greater public access to juvenile court proceedings."

One new provision in the legislation presented yesterday gives Kentucky's chief justice the ability to establish rules to manage juvenile and child protection cases. The legislation also calls for parents -- and children if they are old enough -- to meet with their court-appointed attorney before they go to court for the first time. That does not happen now.

And the bill says that as of July 1, 2010, attorneys would have to prove that they had received specialized training before they could be placed on a new list that would allow them to be appointed by the court to represent children and parents.

Under the proposed legislation, fees for court-appointed attorneys would be increased from $500 to as much as $1,500, but they would have to justify those fees to the state.

Thanks to Kentucky Law Review for catching this story.

Miller v. McGinty, Attorney Fees, Rules of Civil Procedure

Miller v. McGinty, ___S.W.3d___(Ky. App. 2007)

Ex-husband appealed order of TC requiring him, pursuant to KRS 403.220 and CR 37, to pay $8,500 of attorney fees to Ex-wife, claiming that TC failed to consider the financial resources of both parties as required by KRS 403.320 and that CR 37 and the holding of Lampton v. Lampton, 721 S.W.2d 736, 739 (Ky. App. 1986) were inapplicable to the facts of his case.

When Ex-Wife initially filed her Petition for Dissolution, she was unaware of Ex-Husband’s address. She therefore attempted service through a Warning Order attorney. Darren resided in Utah, was a member of the Air National Guard, and unknown to Ex-Wife, was stationed in Iraq at the time she filed for divorce. The Warning Order Attorney filed his report and, subsequently, a default hearing was held, resulting in TC’s issuance of findings of fact, conclusions of law, and decree of divorce. Ex-Husband then filed a Motion to Alter, Amend or Vacate this Order on the basis that Ex-Husband had not been properly served. TC granted the motion, Ex-Wife served Ex-Husband through Secretary of State, and new trial was held. TC divided property and debts and ordered Husband to pay $8,500 of Ex-Wife’s attorney fees.

Ex-Husband first contended that TC failed to consider the financial resources of the parties before awarding attorney's fees to Ex-Wife. CA noted that although a trial court is not required to make specific findings on the parties' financial resources, TC must consider the financial resources of the parties before ordering an award of attorney’s fees. Further, KRS 403.220 requires a showing of an imbalance in the financial resources of the respective parties. In this case, TC expressly stated that no evidence was submitted concerning the parties' financial resources, requiring the court to make assumptions from evidence submitted regarding the financial circumstances at the time of the marriage as to the status of their financial resources at the time of trial, though the parties had been separated for over 3 years and divorced for 2 years. CA held that the financial situations of the parties during their marriage were too remote in time for the court to make such a finding based on this evidence, and TC abused its discretion in making award of attorney fees without first considering the parties' financial resources at the time that the court entered its order. CA vacated attorney fee award under KRS 403.220 and remanded issue to TC.

Ex-Husband next asserted that TC erred by basing the attorney fee award on the case law of Lampton and CR 37, as they are inapplicable to a party's failure to voluntarily submit to personal jurisdiction. CR 37, which is titled "Failure to Make Discovery; Sanctions," permits a court to award attorney's fees as a sanction against a party who fails to conduct discovery or abide by discovery rules. In Lampton, CA implied that an award of attorney's fees under CR 37 is appropriate if the award is motivated by the party's obstruction of and refusal to cooperate with discovery. In this case, TC provided that an award of attorney's fees under CR 37 was appropriate due to Ex-Husband’s irresponsibility with regard to the parties' financial matters. CA held that this reasoning had no connection to discovery proceedings in the case. Furthermore, Ex-Husband’s failure to submit to TC’s jurisdiction despite his knowledge of the case also held no connection to CR 37 nor merited an award of attorney fees under any rule or statute, as there is no requirement in Kentucky that a defendant submit to the court’s jurisdiction once he gains knowledge of the action. CA reversed any portion of the attorney fee award based on CR 37.

Ex-Husband also alleged that if TC had the authority to award attorney's fees in this case, the reasonableness of the fees awarded was improperly analyzed by TC. CA held this claim to be moot as it had vacated the award.
Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates.

Hinshaw #2: Attorney Fee Award Must Be In Name Of Attorneys

This case is now final; SW3d cite will be supplied when available. This is Hinshaw # 2, not to be confused with Hinshaw #!, in which a motion for discretionary review is pending.
Hinshaw v. Hinshaw, __ S.W.3d __ (Ky. App. 2006), 2006 WL 3334040 (Ky. App.)