Divorce Law Journal

New company was "alter ego" of husband and subject to garnishment of divorce debt for wife's attorney fees - Published Opinion from Ky Court of Appeals July 15, 2016

LEE, ET AL. V. LEE, ET AL.

Wife obtained a common law judgment for attorney fees against Husband and his company in divorce action. Subsequently, Husband formed a new company. Wife obtained an order of garnishment for the new company’s bank account. Husband filed a motion to quash, which was denied by the family court. The family court found that the new company was Husband’s “alter ego.” Husband appealed arguing the garnishment was void ab initio because it was ordered before Wife had any final judgment against the new company. The Court of Appeals affirmed the family court’s order holding that the family court acted properly under KRS 425.501 in finding the new company was “a judgment debtor in its capacity as an ‘alter ego’” of Husband.

Digested by Elizabeth M. Howell.

Ky Court of Appeals - GAL may invoke or waive the child's patient-psychotherapist privilege on behalf of the child in a child custody proceeding

EVANS V.HESS, ET AL.

The Kentucky Court of Appeals addressed three appeals stemming from the same Boone Family Court post-dissolution case:

2013-CA-002072-ME

The first appeal filed by Father challenges the court’s subject-matter jurisdiction, custody modification, and child support modification. Father first argues the Kentucky court lacked subject-matter jurisdiction because the Petition was filed in Kentucky before the Montana court determined Kentucky was the more convenient forum. Prior to the current appeal, Father filed a writ of prohibition and the Court of Appeals held Kentucky had subject-matter jurisdiction. As the “law of the case” doctrine provides that a decision of an appellate court applies to any subsequent trial or appeal, even if erroneous, Father’s argument is without merit. The Court of Appeals holds the trial court had subject-matter jurisdiction.

Father goes on to argue the trial court abused its discretion in modifying custody. He first cites Mother’s failure to file two affidavits pursuant to the requirements set forth in KRS 403.350. The Court of Appeals applies the Supreme Court’s ruling in Masters v. Masters holding, “a trial court had authority to rule on a motion for custody modification despite the party’s noncompliance with an affidavit.”  Masters v. Masters, 415 S.W.3d 621, 624 (Ky. 2013).

Father further argues that the trial court abused its discretion by disregarding the custodial evaluation. The Court of Appeals affirms the trial court holding it did not abuse its discretion citing its consideration of all the evidence and finding the custodial evaluation less credible than other evidence presented.

Father also argues the trial court abused its discretion in modifying child support. The Court of Appeals disagrees holding the trial court’s decision was not clearly erroneous in that the trial court’s decision was supported by substantial evidence.

2014-CA-001512-ME

The second appeal filed by the children’s GAL questions the trial court’s authority to overrule the GAL’s objection to testimony from the children’s psychotherapist. KRE 507 governs patient-psychotherapist privilege and grants exceptions to the privilege only when the  mental condition of the patient is at issue. In this case, the testimony was not directly related to the mental health of the children. Traditionally, no exception would apply. However, Kentucky has never held children have an independent right to assert patient-psychotherapist privilege in custody proceedings.

The Court of Appeals holds that a GAL when appointed may either invoke or waive the patient-psychotherapist privilege on behalf of the child stating:

“To allow a parent to waive a privilege held by the child in a custody

dispute, over the objections of that child, is not only bad policy, but defeats the

purpose of the existence of the privilege. The impropriety of a rule allowing such

waiver would be further complicated here by the fact that the parent waiving the

privilege was furthering interests which are neutral, if not actually adverse, to those

of the children.”

The Court of Appeals reverses the trial court to the extent the testimony from the children’s psychotherapist was admitted.

Notably, the court states this case is distinguishable from Bond v. Bond where the mental health of the children was at issue, but does not clarify when the children’s mental health is of enough significance to rise to the level of one of the exceptions to the privilege found in KRE 507(c). Bond v. Bond, 887 S.W.2d 558 (Ky. App. 1994). The court simply states, “the psychotherapist-patient privilege protects confidential communications from disclosure no matter how relevant they may be to a disputed issue.”

 

2015-CA-000043-ME

The final appeal addresses issues of contempt. Father argues that the trial court abused its discretion by denying his request for make-up parenting time as a sanction for Mother’s contempt. The Court of Appeals holds the trial court did not abuse its discretion because Father’s motion did not include any language to indicate his request was sought as a sanction, contained multiple motions, and was moot.

Next Father argues the court abused its discretion by denying his motion to modify child support when one of his children turned eighteen. Father’s motion did not include a child support worksheet, income information, or insurance documentation as required by KRS 403.212(6)(a) and FCRPP 9(4). While Father is entitled to a review of child support, the Court of Appeals holds the trial court correctly determined the motion at issue was defective.  

Finally, Father argues the trial court abused its discretion by staying Mother’s payment of his attorney fees as a sanction during the appeal. The Court of Appeals holds the prevention of inconsistent rulings is a legitimate reason to stay the enforcement of the sanction and such order was within the trial court’s discretion.

Digested by Elizabeth M. Howell

Rights of Third Parties to Enforce Judgment in Divorce Proceeding, Case Digest, Fortwengler v. Fortwengler, Ky Court of Appeals

Fortwengler v. Fortwengler, 2011-CA-0018933-MR and 2011-CA-002077-MR

Published:   Affirming   

County:  Jefferson

Ex-Husband appealed FC’s order terminating his garnishment of maintenance payments to Wife for satisfaction of debt to Ex-Husband’s father as well as FC’s order denying Ex-Husband’s parents’ motion to be joined as parties to the dissolution action in order to collect the debt.

FACTS:

When parties divorced, FC ordered that $20,000 owed to Husband’s father was a marital debt and that each party should be equally responsible.  Ex-Wife appealed from this order.  While the appeal was pending, Ex-Husband filed a non-wage garnishment against Ex-Wife to collect the debt, in the amount of $1,200, the monthly amount of maintenance he had been ordered to pay to her.  Ex-Wife filed motion to quash the garnishment and an affidavit challenging the garnishment, contending that FC did not have jurisdiction of the issue as an appeal was pending, that no judgment had been issued to Ex-Husband’s parents because they were not parties to the case and did not have standing, and that Ex-Husband was attempting to evade his maintenance obligation.  Ex-Husband responded that FC did have jurisdiction because Ex-Wife had not posted supersedeas bond and that FC should set a hearing on the challenge to the garnishment.  After hearing, FC granted Ex-Wife’s motion to terminate the garnishment, noting that no common law judgment has been entered nor had a separate lawsuit been entered by Ex-Husband’s parents; that they could not assign the debt to Ex-Husband to be collected in the dissolution as it appeared to be an attempt to circumvent his maintenance obligation.  Ex-Husband filed a timely appeal of this order.  Subsequently, Ex-Husband’s parents filed a motion to intervene in the divorce proceeding for the limited purpose of setting a payment schedule in order to effectuate Ex-Wife’s payment of her portion of the debt.  FC denied the motion and Ex-Husband timely filed an appeal of that order. 

ANALYSIS:

CA noted that Ex-Husband’s frequent iteration of the phrase “this assignment of error was preserved for appellate review” is insufficient to identify preservation of issues in the record as required by CR 76.12(4)(c)(v), but nonetheless proceeded with review on the merits.

CA disagreed with Ex-Husband’s contention that because the creditor, his father, testified regarding the debt and the debtor, Ex-Wife, had an opportunity to cross-examine the creditor and raise any defenses she may have, his father should not have to obtain a judgment in separate proceeding, and that FC could have joined his father as a party to the case for this purpose under KRS 403.150(6).  CA found the additional parties to be jointed referenced in that statute would not be third-party creditors, but rather parties who may have custody rights to children of the parties.  The proper method for Ex-Husband’s father to collect on the debt is through a common law judgment or through a separate lawsuit.  Regarding his father’s motion to intervene, CA held that denial of the motion was proper as no attempt had been made by Ex-Husband’s father to collect the debt via common law judgment or separate lawsuit. 

Affirmed.

Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates  

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