Opinion
14-P-646
02-18-2016
KERRI M. CARBONE v. PETER J. CARBONE.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In this appeal from judgments entered in the Probate and Family Court, the husband challenges aspects of the property division, the award of legal fees to the wife, and the contempt finding against him. We affirm, addressing the husband's various claims in turn.
1. Valuation of Marginal Street LLC. The husband contends that the divorce judge erred by counting as an asset a $551,000 loan that Carbone Sheet Metal Corp. (the corporation) owed to Marginal Street LLC (the LLC). More particularly, the husband contends that the loan was of no value as an asset, due to the precarious financial condition of the corporation.
"Valuation is a question of fact, and we will not disturb a judge's determination unless it is clearly erroneous." Sarrouf v. New England Patriots Football Club, Inc., 397 Mass. 542, 550 (1986). See Bernier v. Bernier, 449 Mass. 774, 785 (2007). As reflected in the divorce judge's findings, which are supported by the record, the loan was reported as an asset on the LLC's annual balance sheets, and as a liability on the corporation's annual balance sheets. Moreover, the divorce judge specifically found that the husband "failed to offer any competent or credible evidence why the Court should not include this balance due from the corporation . . . in the [LLC's] value."
The outstanding loan balance was listed as $500,000 on both entities' balance sheets as early as 2007. By the time of trial, however, the LLC's balance sheet reflected an outstanding loan balance of $551,016, an amount that was adopted by the divorce judge and does not appear to be contested on appeal.
There is no merit to the husband's argument that the corporation's stipulated zero dollar value "is sufficient evidence, in [and] of itself, that [the corporation] would never be able to repay the loan." As a threshold matter, the argument fails to recognize that the loan reduced the corporation's book value and thus may have factored into the stipulated zero dollar value. In any event, though the husband asserts that the corporation's inability to repay the loan was "uncontroverted," the record does not support such a claim. Indeed, the record reflects that the corporation's earnings were, at minimum, holding steady during the divorce proceedings. The record is devoid of any testimony or other evidence suggesting that generally accepted accounting principles would require that the loan be carried at less than full value based on the condition of the corporation at the time of the parties' divorce. There is support in the evidence for the judge's finding, and it is not clearly erroneous. See ibid. (valuation will be upheld so long as it is not "materially at odds with the totality of the circumstances").
Though the husband and the corporation's chief financial officer, John Kelley, both testified that the corporation had (at some point) begun defaulting on its bank loans, the problem was apparently resolved once the parties refinanced the commercial property in May of 2011. Kelley further testified that "too much money had been taken out of the company." However, neither the husband nor Kelley stated that the corporation would never be able to repay the LLC loan. In addition, neither of them stated that the corporation was on the verge of defaulting on its bank loans again, or that it was experiencing a decline in business.
The corporation's tax returns indicate a modest six percent increase in gross receipts or sales from 2010 to 2011. Moreover, the corporation's annual balance sheets reflect a twenty-nine percent increase in accounts receivable from 2010 to 2012.
2. The shareholder loan. At trial, the husband sought contribution from the wife for a $263,000 shareholder loan that the parties allegedly borrowed from the corporation during the marriage. The divorce judge declined to include the shareholder loan in the marital estate, specifically finding that, because the husband is the sole shareholder, "he controls the payment [of the loan], and the means by which the corporation would then apply the monies received." Contrary to the husband's contention that the judge's finding was inconsistent with his treatment of the LLC loan, the "judge's conclusions were, in effect, based on an assessment of the husband's credibility" -- an assessment that is "quintessentially the domain of the trial judge" and "close to immune from reversal on appeal except on the most compelling of showings." Johnston v. Johnston, 38 Mass. App. Ct. 531, 536 (1995).
From 2007 through the beginning of 2011, the corporation reported a $283,371 shareholder loan on its tax returns. By the end of 2011, the loan amount had increased to $350,760. By the time of trial in mid-2013, the amount had increased to approximately $440,000, according to the testimony of John Kelley. See note 2. The husband, however, testified that only $263,000 was borrowed during the marriage.
It is apparent from the divorce judge's findings that he was skeptical of the husband's intention to repay the shareholder loan. That skepticism was consistent with the judge's determination that the husband lacked credibility with respect to other aspects of his finances. See Crowe v. Fong, 45 Mass. App. Ct. 673, 679 (1998) (trial judge entitled to "draw inferences adverse to [the husband] from the uncertainties surrounding his financial affairs"). Moreover, since the corporation's income flows to the husband, the judge did not err in finding that repayment of the loan, if it ever were to occur, would essentially be made by the husband to himself.
By way of example, the divorce judge found that the husband lacked credibility as to certain liabilities reported on his financial statement and as to the extent of his income.
3. The Gloucester property. In awarding the parties' Gloucester vacation home to the husband, the divorce judge found the property's value to be "zero." The husband contends that this valuation was error because that property in fact had a negative value at the time of the divorce. To the extent (if any) that the judge may have overvalued the property, any such error was de minimus because the amount in question represents less than two percent of the over-all marital estate. See Ross v. Ross, 50 Mass. App. Ct. 77, 81-82 (2000). As such, any error furnishes no ground for reversal.
While the parties stipulated that the property's fair market value was $912,500, they did not stipulate as to its equity value. Based on the parties' testimony and financial statements, it appears that, at the time of trial, the mortgages on the property exceeded its fair market value by approximately $41,000.
4. The country club deposit. The husband similarly contends that the judge erred by treating a refundable $25,000 country club deposit as a personal asset subject to equitable division. The husband claims the deposit was a corporate asset that was already "subsumed within" the corporation's stipulated zero dollar value.
While the deposit was indeed paid by the corporation, it was not listed as an asset on the corporation's annual balance sheets. Moreover, the divorce judge found that the parties, rather than the corporation, were members of the country club -- a finding that has some support in the record. In any event, even if the judge erred in his treatment of the deposit, like the negative equity in the Gloucester property discussed supra, its value is insignificant when viewed in light of the over-all marital estate. See ibid.
The country club membership agreement expressly provided the husband, the wife, and their children with club access.
The same is true of the combined amounts of the country club deposit and the negative equity in the Gloucester property.
5. The loan from the husband's mother. The husband next contends that the judge erroneously disregarded a loan allegedly owed by the husband to his mother. In excluding the loan from the marital estate, the judge declined to "credit [the husband's] testimony" regarding the alleged loan "as it was unsupported by any independent evidence such as cancelled checks, bank deposits, promissory notes or other independent testimony." The judge was not required to credit the husband's testimony. See Baccanti v. Morton, 434 Mass. 787, 791 (2001). Accordingly, we discern no clear error or abuse of discretion.
6. The tax liability. As part of the property division, the divorce judge found the parties to be equally responsible for an outstanding tax liability of $120,000. It is undisputed that, at the time of the divorce, the parties had an outstanding joint tax liability of $120,000, as reflected on the husband's own financial statement submitted at trial. The husband, however, asserts that the original balance was $180,000 when the parties separated, and therefore that he should be credited for $60,000 in tax payments he made during the pendency of the divorce proceedings without contribution from the wife. The husband did not raise this claim at trial; accordingly it is waived. Moreover, even if the evidence clearly established that the parties owed $180,000 when they separated, the judge was not bound to that figure because values are determined as of the date of the divorce trial, rather than at the time of separation. See Moriarty v. Stone, 41 Mass. App. Ct. 151, 154 (1996).
At trial, the husband testified he could not recall the amount of taxes owed at the time of the parties' separation.
7. Attorney's fees to the wife. The husband argues that the divorce judge abused his discretion by awarding the wife $50,000 in attorney's fees and costs. Pursuant to G. L. c. 208, § 38, a trial judge has discretion to award attorney's fees where appropriate, and the award "will not ordinarily be disturbed." J.S. v. C.C., 454 Mass. 652, 666 (2009), quoting from DeMatteo v. DeMatteo, 436 Mass. 18, 39 (2002). In determining the appropriateness of an award, we look to whether the judge's findings reflect his consideration of counsel's ability, the results secured, the hourly rates and amount of time spent by counsel, the existence of contemporaneous time records, the parties' financial positions, and any conduct that unreasonably prolonged the proceedings. See Cooper v. Cooper, 62 Mass. App. Ct. 130, 141 (2004). In the present case, the divorce judge awarded the wife approximately twenty-five percent of her attorney's fees, specifically finding that the "central issue at trial was the value of the . . . LLC" and the husband's "position as to the [LLC's] value was without any merit." The judge credited the affidavit and detailed billing statements submitted by the wife's counsel and specifically found the fees to be "fair and reasonable and commensurate with [counsel's] skill and ability." While the divorce judge's findings could have been more detailed, it is apparent from the record that the judge had "intimate[] familiar[ity]" with the issues in the case, the parties' respective financial positions, and counsel's ability. Moriarty, supra at 159. We discern no abuse of discretion in the fee award.
8. The contempt judgment. The husband claims that the contempt judge erred in finding him in contempt of the June 4, 2014, order. The June 4, 2014, order required the husband to "cause" the discharge of the mortgages on the marital home by June 30, 2014, or pay the wife $35,000 to cover her fees and costs. It is undisputed that the husband failed to meet either of those requirements.
The husband argues that there was no clear and convincing evidence of his disobedience, as he made a good faith effort to timely discharge the U.S. Alliance mortgage but was thwarted by the wife's refusal to sign a subordination agreement with the refinancing bank. We note that the wife was not required to subordinate, and there is nothing in the record suggesting that the husband could not discharge both mortgages by other means, such as paying off the note held by the wife and secured by the LLC property or refinancing the Stoneham Bank mortgage as well. In any event, the clear and unequivocal command contained in the June 4, 2014, order could be met either by causing the mortgages to be discharged or by paying a specified sum to the wife. It is clear that the husband had the ability to pay the wife $35,000 despite his inability to timely discharge the U.S. Alliance mortgage. Accordingly, we discern no abuse of discretion in the contempt finding against the husband. K.A. v. T.R., 86 Mass. App. Ct. 554, 567 (2014) ("A judge's ultimate conclusion on the contempt finding is reviewed under the abuse of discretion standard").
We note that the wife's lien on the LLC property was already subordinate to Stoneham Bank's mortgage, and that Stoneham Bank eventually agreed to the refinancing without an express subordination agreement from the wife.
The husband's financial statement submitted in connection with the contempt proceedings reflected weekly income of more than $9,000, with a net surplus of approximately $2,000 after deducting all expenses. It also indicated that the husband had paid off numerous personal liabilities since the divorce trial.
9. Appellate attorney's fees. Finally, the wife requests an award of reasonable appellate attorney's fees in connection with this appeal. We agree that such an award is appropriate. The wife may within fifteen days after this decision file with this court and serve on the husband materials detailing and supporting her request for appellate attorney's fees in accordance with the procedure described in Fabre v. Walton, 441 Mass. 9, 10-11 (2004). The husband may, within fifteen days thereafter, file with this court and serve on the wife an opposition to the amount of fees claimed. Id. at 10.
The husband's request for reimbursement of appellate attorney's fees and costs paid to wife pendente lite is denied.
Amended judgment of divorce affirmed.
August 12, 2014, judgment of contempt affirmed.
By the Court (Green, Vuono & Meade, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: February 18, 2016.