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“She Got the Goldmine, I got the Shaft” as retold by Clark v. Dyer, COA 13-1230

September 4, 2014 | Mark Spencer Williams | Family Law, Property Distribution | No Comments

Carlton and Susan met in 2004 at Chrome’s Bar and Grill in Fayetteville where Carlton was a customer and Susan was working as a bartender.  They began dating and Susan became pregnant with their first child.  By 2009 they separated and were divorced in 2011.

Carlton owned a business before, during and after their marriage called Air Tech.  Evidently, Carlton failed to obtain a prenuptial agreement to protect his business assets before he married Susan. During their marriage, Susan did not contribute any money to their bank accounts and therefore, Carlton mistakenly argued, none of the money in those accounts were “marital.”

The North Carolina Court of Appeals issued an opinion on 2 September 2014 in the Clark v. Dyer matter.   Attorney Terry Garner represented the Defendant, Susan Belmain Dyer at trial but Susan had no representation on appeal. Kimberly M. Ferrier represented Plaintiff, Carlton Clark, Jr., both in the trial court and on appeal.

At trial, Carlton and Susan were each awarded 50% of the marital property.  On appeal, the Court of Appeals summarized Carlton’s argument as “the trial court gave [Susan] the gold mine, while he got the shaft” referencing the Jerry Reed song:

“‘Goodbye, turkey. My attorney will be in touch.’ So I decided right then and there I was gonna do what’s right[.] Give ‘er her fair share but, brother, I didn’t know her  share was gonna be that much. She got the goldmine . . . I got  the shaft. . . . They split it right down the middle, And then they give her the better half.” Jerry Reed, She Got the  Goldmine (I Got the Shaft), on The Man with the Golden Thumb (RCA Records 1982).

The Court of Appeals found many flaws in Carlton’s appellate brief including inaccurate references to the record and transcript and the Court somewhat chastised Carlton for dwelling on the circumstances around the inception of his relationship with Susan which the Court found irrelevant to the appeal.  The Court of Appeals also found that all of Carlton’s earnings during the marriage were marital and thus all of the funds he deposited to the bank accounts which he contended were his separate property (under some flawed theory that because Susan did not make any contributions his earnings must be his) were marital.

Carlton also argued unsuccessfully on appeal that the $22,637.29 he was ordered to pay toward Susan’s attorney fees should have been treated as marital debt.  The Court of Appeals found that a debt is one incurred during the marriage and this debt was incurred after the parties separated and found the argument to be frivolous.  And he also argued unsuccessfully that Susan failed to get an appropriate business valuation of his business.  The Court of Appeals found that “To the extent that the trial court lacked evidence on these valuations, plaintiff, as the owner and operator of these businesses, would be primarily at fault, as he had all of the information regarding his “separate business property[.]”  (See our blog on business valuation for more information on that subject).

This case teaches us several things.  First, get a prenup and/or postnup to protect your business assets.  Second, don’t mistakenly assume that keeping your bank accounts separate somehow makes the money you earn during the marriage your  separate funds.  Third, get an expert to properly value your business and ensure that testimony is properly presented.  Finally, if you lose at trial and decide to appeal, make sure your brief is accurate and on point.

 

Read “She Got the Goldmine, I got the Shaft” as retold by Clark v. Dyer, COA 13-1230 »

Are you a Business Owner Facing Divorce?

August 27, 2014 | Mark Spencer Williams | Divorce & Separation, Family Law, Property Distribution | No Comments

Business ValueUnless you have a valid prenuptial agreement or postnuptial agreement that protects your business as your separate property, when you divorce the business is likely to be an asset that is divided in the divorce. This article provides an overview of what happens without a prenup or postnup.

In North Carolina, any property obtained during the marriage is subject to equitable distribution. Property obtained before marriage is usually one’s separate property and property obtained during the marriage is usually marital property subject to division. An equitable distribution is presumed to be an equal distribution although a judge can award a greater percentage.  This is all set out in N.C. Gen. Stat. 50-20.

If one spouse owned the business before marriage but continued to work in the business after being married, a portion of the business may be separate property and a portion of the business may be marital property. The other spouse is often entitled to one-half the increase in value of the business measured from the date of marriage through the date the parties’ separated. If there has been no increase in value, there may be nothing to divide.

Husband and Wife can agree how to divide the business. One can maintain ownership and buy the other out. For example, if Husband owns a car dealership worth $1 million that was created during the marriage, Wife will be entitled to $500,000. Of course a buy out will require that the buyer can fund the purchase (which often occurs through the transfer of other assets such as 401(k), IRA, real property, etc.). The parties can continue to own it jointly and run it together which is not a good option given that ex-husbands and ex-wives don’t usually get along that well and probably would not be able to run a business together. Or the parties can sell it for its true fair market value and split the sales price.

If the parties cannot agree how to handle the business, the court will divide it in equitable distribution. Often this means the business needs to be valued and the spouse who keeps it will have to pay the other spouse their share of its value. And if the business has so much debt that it has a negative value one spouse may have to pay the other to take the business and its liabilities (this in part depends on the legal structure of the business entity).

Business valuation is perhaps the most difficult aspect of this process. It generally requires that an expert be hired to value the business. Three common approaches to valuing the business include: (a) an assets approach that considers the value of the assets and liabilities; (b) a market approach which considers what the business could be sold for on the open market; and (c) an income approach which determines what amount of capital would be necessary to secure the earnings produced by the business.

Its important that you hire a lawyer who understands complex business valuation.

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Scortched Earth Divorce Creates a Pyrrhic Victory

August 25, 2014 | Mark Spencer Williams | Child Support, Divorce & Separation, Family Law | No Comments

Scortched EarthI was sitting in Court last week waiting for the Judge to finish a case she was hearing so that I could seek an Ex-Parte Emergency Child Custody Order for my client.  While waiting, I watched and listened to the trial taking place before me.

Apparently a former husband who was representing himself, pro se, had filed to reduce his child support and the former wife, who was represented by an attorney, had filed to hold him in contempt of court for non-payment of child support and had sought formal discovery from him which he had not supplied.

And then the husband said words to the effect of  “your honor I have no money as I have spent over $250,000.00 in attorney fees over the past three years.”  And then he related that he was representing himself because he was financially devastated and did not even have enough money to pay his accountant to file his taxes.

A quarter of a million dollars, in attorney fees!

I must admit our firm has never collected this amount of money from a single client for a divorce case.  My first humorous thought was that I was not charging enough.  And then I reflected on the seriousness of the case before me.  This couple once had multiple properties, significant assets, a successful business and they lived well.  Now the husband, if you believe him, has nothing.  His properties went into foreclosure, his business was shut down because he could not pay creditors and his income gone.  And I think I do believe him because he also told the judge that she should put him in jail because he had no more money to pay.  But the wife certainly does not believe him and obviously distrusts him because she has her lawyer chasing documents in an attempt to prove he is hiding cash.

This case caused me to think about a Pyrrhic victory.

In 279 B.C., King Pyrrhus of Epirus, defeated the Romans at Heraclea and in 280 B.C. defeated the Romans at Asculum but his army suffered such irreplaceable casualties in winning that the win was a “loss” thus coining the phrase “Pyrrhic Victory.”

It would seem to me that this couple is like King Pyrrhus and the Romans.  I am not sure whether the wife or the husband “won.”  From what I heard in Court, it appeared both had lost a great deal.  It appears that the scortched Earth policy that each took with the other resulted in neither having much of anything.  Perhaps in the end only the attorneys won in the case I watched.

And this would seem to teach us a few things.

1) As attorneys, we need to be mindful of the cost/benefit of the actions we take for our clients and we need to educate our clients on this and include them in the decision making process;

2) Litigants need to take a step back and consider the whole picture; and

3) Avoid Pyrrhic victories.

As an end note, I am not a fan of collaborative law.  In fact, I wrote a very negative review of collaborative law in 2009.  If collaborative law is one extreme then a scortched Earth Pyrrhic victory is the other.  The successful litigant falls somewhere in between.

 

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Can My Spouse and I Use the Same Divorce Attorney?

August 2, 2014 | Mark Spencer Williams | Divorce & Separation, Ethics, Family Law | No Comments

Screwed

We often get telephone calls asking whether a divorcing couple can use the same attorney for their divorce.  The short answer is NO!

It is a violation of the lawyer’s rules of ethics to represent both husband and wife in a divorce.  The interests of the parties are directly adverse to each other and there is no possible way for the attorney to competent, diligent representation to both.  The American Association of Matrimonial Lawyers states that “An attorney should not represent both husband and wife even if they do not wish to obtain independent representation.”

Even if husband and wife have reached an informal agreement regarding the issues of their marriage and solely desire that a lawyer or mediator draft their agreement, it is not possible for one individual to do this without favoring one party over the other.

For example, suppose that husband has a pension and the lawyer has been asked to draft an agreement that divides the pension equally between the parties.  The lawyer knows that the agreement can be drafted to provide survivorship benefits for the wife in the event of husband’s death but in doing so it will reduce the monthly amount husband will receive before his death.  Without including the clause giving survivorship benefits, the Wife may get nothing upon Husband’s death.  Even bringing this issue up to both parties may cause Husband to lose something or the deal to unravel.  Its impossible for the lawyer to discuss the pros and cons with both parties and help them reach a decision about this issue and be loyal to both.

Clients are entitled to attorneys they can trust to act with commitment and dedication to their interests in their legal matters.  Its simply impossible for an attorney to advise both Husband and Wife.

No attorney in the State of North Carolina can ethically represent both Husband and Wife in a divorce.

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Retroactive Child Support

July 29, 2014 | Mark Spencer Williams | Child Support, Family Law | No Comments

Child Support HearingThe North Carolina Court of Appeals decided the case of Loosvelt v. Brown, ___ N.C.App. ___ (2014) on 15 July 2014. Mr. Grant Loosvelt, a California citizen, brought a lawsuit against Ms. Stacy Brown for child custody and to establish his child support obligation. Ms. Brown brought counterclaims including one for retroactive child support. The trial court awarded over $7,000.00 per month in child support along with almost $40,000.00 in retroactive child support including in excess of $5,000.00 in pre-birth nursery expenses and maternity clothes.

The Court of Appeals addressed the issue of retroactive child support and clarified the law on what expenses can be recovered before a child’s birth. A parent’s obligation to pay child support arises when the child is born. However, a parent may be obligated for “medical expenses incident to the pregnancy and birth of the child.” N.C. Gen. Stat. § 49–15.

A parent can seek retroactive child support for child support prior to the filing of a complaint. However, the Statute of Limitations (N.C. Gen. Stat. § 1-52(2)) limits a parent to no more than three years of retroactive support. The parent seeking retroactive child support must present sufficient evidence of past expenditures made on behalf of the child, and evidence that such expenditures were reasonably necessary.

If you are filing an action for child support, be sure to talk with your lawyer about making a claim for retroactive support.

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A DIY Divorce Is a Bad Idea!

July 23, 2014 | Mark Spencer Williams | Divorce & Separation | No Comments

Today I watched men and women one by one trying to get a District Court Judge to grant them a divorce without the help of a lawyer.

Just Divorceprior to this, attorneys put their client’s on the witness stand, asked a few questions and got their clients divorced in just a few minutes.  Attorneys also handled summary judgment motions where the clients did not even appear before the judge but the divorces were granted.  Perhaps as many as 10 divorces done in less than 25 minutes.

And then came the Pro se litigants.  Pro se is a Latin phrase meaning “for oneself.”  When someone represents themselves without a lawyer in court, they are acting pro se.  

These pro se folks were visibly nervous.  When their name was called, the bailiff asked for copies of their divorce judgments and copies of their divorce certificate.  If they did not have them, they were asked to leave.  If they had them, the Judge would review them.  At this point, nearly 4 of 5 were turned away because the paperwork was not in proper form.  One of the gentlemen who sought a divorce protested to the Judge that this was his “second time” trying to get the divorce after having been there a few weeks ago.  After reviewing his paperwork and finding it deficient, this man learned he would have to come again next week for a “third time.”

Another person could not finalize the divorce because the Separation Agreement and Property Settlement that was requested to be incorporated into the Divorce Judgment was not in the file.

In my opinion, the Judge properly handled these pro se folks.  Some of their questions:  If the Separation Agreement is not in the file, can I go ahead and just get divorced without having it incorporated?  Judge:  I know the answer to that but I can’t answer because that would be giving you legal advice.  I suggest you speak with a lawyer.  And that was the right answer from the Judge.  This simple decision to incorporate or not could have significant positive or negative implications for the person seeking the divorce.

But the bigger issue is I saw individuals obtain a divorce who most likely had not filed an action for spousal support or equitable distribution.  And when they thought they had “won” by obtaining that divorce, the truth is that they had lost big because by failing to bring these claims before the entry of the divorce they had forever waived their right to alimony and distribution of marital property (including pensions, military pensions, etc.).

While our Firm has posted information about a DIY Divorce, we strongly recommend you hire a lawyer instead to ensure you preserve your rights.

By hiring an attorney you may save yourself thousands of dollars simply by protecting your rights.  You may also feel less nervous in court, may not even have to take time off from work to show up for court,  and are far less likely to have to show up for court on more than one occasion.

 

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Urban Farming: Fresh Eggs Could Result in New Headaches

May 3, 2014 | Richard Forrest Kern | Civil Law, Family Law, Land use, Zoning law | No Comments

As the local and regional food shed movement and the urban agriculture movements continue to grow, land uses once considered only for rural landscape are now sprouting up in urban and suburban communities. From nuisance law to zoning regulations; your desire to raise your own chickens for eggs or plant your own corn may require the advice and counsel of an attorney to help jump the hurdles.

A growing trend in the United States and North Carolina is farming by private landowners. Rural and urban landowners are doing more home gardening and backyard farming. Whether you are planting veggies, raising chickens for eggs or using goats for milk, there may be some legal problems with your farming endeavors.

  • Why are more people growing their own vegetables or raising their own chickens for eggs or dinners? There are several reasons why someone might want to farm;
  • Whether it is true or not, some people believe raising their own food is cheaper. It can be but it is not always cheaper;
  • Health is another reason; avoiding insecticides, herbicides, genetically engineered produce, and pesticides is a major reason for farming your own food;
  • Chicken eggs from your own chickens just taste better, so does a pork chop from your own pig and squash from your own garden; and
  • Farming can be used as a learning activity for children and a family bonding activity.

No matter what you are farming or why you are farming, there are many legal issues you need to keep abreast of when home farming:

Local zoning laws and ordinances: Many municipalities have restrictions on which and how many farm animals you may keep on your residential property. N.C. Gen. Stat. § 160A-186 grants power to municipalities to regulate or ban “domestic animals,” inside their jurisdictional limits. According to the grant of power a city may regulate, restrict, or prohibit the keeping, running, or going at large of any domestic animals, including dogs and cats. However, cities and towns that once banned outright chicken and other livestock are now reversing course. Raleigh, Durham and Chapel Hill all allow chickens. The Town of Carrboro allows chickens and goats. The Cary Town Council has authorized town staff to research and draft a proposed ordinance allowing up to eight hens on residential property. However, some communities still ban urban livestock. Check your local laws and zoning ordinances but be aware, some ordinances do not directly ban home livestock production but instead rely on a specific interpretation of their own ordinances to justify a de facto ban. Hire an attorney to review the ordinances with you and to determine if you may be qualified to seek a variance, special use permit or other legal avenue to meet your need to farm and the legality of your locality

Building laws and ordinance:. Building codes and/or ordinances may prevent you from building a chicken coop, a corral, or a barn. There may be set back restrictions, there may be restrictions on the size or type of building you can build for your animals. There may be types of construction methods that are not allowed. Again, see out a licensed attorney in your area to determine if there is an issue with your property and whether there is any recourse for you.

Home Owner’s Associations: HOA rules may ban you from keeping animals or even a garden on your property.

Nuisance and attractive nuisance: Before there were zoning laws and continuing through today, many opponents of urban farming focus on nuisance suits. They institute lawsuits over their concern about noise, odors, diseases, and sanitation problems stemming from improper care and maintenance of livestock. They also raise the argument that with urban livestock there is an increase of natural predators in the area that feed on them. Proponents of urban farming say that the keeping of livestock has benefits outweighing the potential negatives: in the case of chickens; pest control; free fertilizer for home gardening; egg production for home consumption; and the fun of a family pet. The urban farmer argues that chickens and goats and even pigs are not as loud and disruptive as dogs, odor is easily controlled with proper cleaning and no more concern than the odor of traditional pets. The Center for Disease Control has stated that it is safe to maintain small numbers of chickens at home. Arguments against urban livestock with respect to trespassing and destruction of property are without merit as they will be subject to animal control laws just like any other family pet and a well-designed coop or pen along with the urban environment will prevent predators from considering the area a buffet.

An attractive nuisance is something that poses a danger to children and lures them onto another’s property and into the danger. According to the Restatement of Torts section 339, which is followed in some jurisdictions, there are five conditions that must be met for a land owner to be liable for damages to a child trespasser. The five conditions are:

  1. The place where the condition exists is one on which the possessor knows or has reason to know that children are likely to trespass, and
  2. The condition is one of which the possessor knows or has reason to know and which he realizes or should realize will involve an unreasonable risk of death or serious bodily harm to such children;
  3. The children, because of their youth, do not discover the condition or realize the risk involved in inter-meddling with it or in coming within the area made dangerous by it;
  4. The utility to the possessor of maintaining the condition and the burden of eliminating the danger are slight as compared with the risk to children involved, and
  5. The possessor fails to exercise reasonable care to eliminate the danger or otherwise to protect the children.

Swimming pools are classic attractive nuisances and as a result many cities and towns have ordinances that require fencing around them to prevent children from trespassing.

Children love animals, so, for the urban farmer, making sure the animals are properly penned is a must and will go a long way to protecting one’s self from such lawsuites. Otherwise, if a child comes onto your property and gets hurt you will be placing yourself at risk for a civil lawsuit.

Check your local ordinances for other permitting requirements and licenses.

No matter your goals for your backyard farm, make sure you follow the rules for your property otherwise you may find out that backyard chickens cost more than they are worth. If you need an attorney to review with you your local rules and restrictions with respect to your backyard farm, please call an attorney licensed in your jurisdiction. If you live in North Carolina, please feel free to call Rice Law, PLLC, we can review the ordinances and rules of your locality in North Carolina and help you determine the viability of urban farming in your locale.

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Pets of Rice Law

September 17, 2013 | Mark Spencer Williams | Family Law | No Comments

Boxer Dog

Our team loves animals.  In fact, at times we bring them to work with us.  We thought we would share some pics of our “extended family”

To see a slide show of all of the pets, follow this link: Pets of Rice Law, PLLC

 

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New Law Allows Stronger Waiver of Alimony

July 5, 2013 | Richard Forrest Kern | Divorce & Separation, Family Law, Prenuptial, Property Distribution, Separation Agreement, Spousal Support | No Comments

There are three basic types of marital contracts in North Carolina – Pre-nuptial agreements, Post-nuptial agreements, and Separation Agreements. Most people know what a Separation Agreement or Pre-nuptial agreement is, which is not to say that there are not misconceptions regarding each, but they each are familiar within the context of popular culture.

 

Post-nuptial agreements, however, are not as common. In North Carolina for many years, Husbands and wives have been able to contract with each other during the marriage regarding matters that are not inconsistent with public policy. Traditionally, contracts which waived or released a dependant spouse’s right to Alimony were considered against public policy. Hence, post-nuptial agreements were limited in this respect and often considered inferior to separations agreements which could address every issue. For this reason, even when the parties intended to attempt reconciliation, post-nuptials were not seen as a way to address all the couple’s issues.

 

There has been a recent change to that tradition. Amendments to N.C. Gen. Stat. §§ 52-10; and 50-16.6(b), make it a little easier to settle all issues between a married couple during a brief period of separation – a trial separation in common vernacular. Couples who have separated but intend to work on their marriage and attempt reconciliation can now address all their marital legal issues if they so desire. This can have the effect of calming the emotions between them and create an environment in which the parties can focus on each other and their marriage instead of arguing over contentious issues. Couples still cannot violate public policy but no longer will a waiver, release, or establishment of post separation support, alimony, or spousal support be considered invalid and inconsistent with public policy and reconciliation will no longer destroy a valid waiver, release, or establishment of support in a post-nuptial agreement.

 

If you and your spouse have decided to separate while still working on your marriage, Rice Law, PLLC, can help you understand, negotiate or draft your post-nuptial agreement to protect your interests. Give us a call.

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Gun Ownership and Child Custody

December 19, 2012 | Mark Spencer Williams | Child Custody & Visitation, Divorce & Separation, Family Law | No Comments

HandgunIn the wake of the horrible tragedy at Sandy Hook Elementary School in Newton, Connecticut, the National debate has intensified on gun control. As an attorney, we sometimes hear concerns of a parent about the “ex” spouse’s firearms.

If a domestic violence action with merit is filed under North Carolina law, the Court will routinely require the defendant to surrender his or her firearms to the Sheriff and that gun-ban may stay in effect for years (if not for life).  In fact, such an order could cause you to lose your job or be discharged from the military.

Even when domestic violence is not an issue, however, the Court can consider firearms as one factor among many in determining which parent should be awarded custody. In a child custody case, everything that has the potential to impact the safety and well-being of a child is fair game.  Pediatric groups have recommended that physicians ask parents whether they keep guns at home, and discuss gun safety with those that do in order to prevent shootings involving children. In 2009, according to the CDC, nearly 400 children younger than 15 were killed by firearms.

In a case decided in 2004 by the North Carolina Court of Appeals, the Court considered the fact that the father was a gun collector who had eleven firearms, who kept his firearms with him even when he ran errands with the children and according to the mother, slept with a loaded firearm under his pillow.

As part of the Court’s order, it found that “Father shall not own or possess any firearms until the children are emancipated, or until further order.” Martin v. Martin, 167 N.C. App. 365, 367, 605 S.E.2d 203, 204 (2004).

The Court of Appeals overturned the order because the trial court had not made any findings that the children were endangered by the guns or that their safety was somehow affected by gun ownership.  Had the court found that possession of the guns somehow endangered the children, the restriction would have likely been upheld.

While this appears to be the only appellate case directly on point, we deal with this issue at the trial level frequently.  In our experience, judges in child custody cases have not negatively affected gun owners who demonstrate to the Court that firearms are used and stored responsibly thereby ensuring that the child is safe and secure.

But since this issue is “fair game” and since there is a real danger to children from firearms that are improperly stored or left loaded within reach, any parent involved in a child custody dispute who also has firearms should strongly consider the following:

  • Discuss the issue with your attorney
  • Make sure the firearms you own are legal and registered (if required)
  • Keep them locked up in a firearm safe so they are not accessible to children
  • Take photographs showing safe storage
  • Document any formal gun training you have had
  • Consider getting Affidavits (and live testimony if need be) of others you have hunted with or been to the gun range with that can attest to your safety habits and responsible gun use.
  • Consider storing your guns at work or at a friend’s house

 

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