Domestic Law Case and Legislative Update

Cheryl HowellInstitute of Government

October 2003

Custody

Rosero v. Blake – NC Supreme Court (June 2003) Between mother and father of

illegitimate child, no presumptions apply Best interest test determines custody At least where father has acknowledged

paternity and “acted consistent with his right to care for and control child”

Custody

David v. Ferguson (COA Aug. 2003) Trial court used best interest to give

father custody COA reversed, citing Rosero (COA) Supreme Court remanded, citing

Rosero (NC) COA upheld best interest without

evidence of father’s acknowledgment

CustodyBest Interest Test

Rosero (NC June 2003) Trial court has discretion to interpret

evidence; upheld if findings – based upon evidence – support conclusion of best interest

McRoy v. Hodges (COA Sept. 2003) Finding that father had no present

relationship with child but would establish one under terms of order held insufficient to support conclusion of best interest

CustodyTemporary Orders

To be temporary, order must state “clear and specific reconvening time, and the time between hearings must be reasonably brief” Brewer, 139 N.C. App. 222 (2000)(1

year not reasonably brief) Cox, 133 N.C. App. 221 (1999)(5

months OK)

CustodyTemporary orders

McRoy v. Hodges (COA Sept. 2003) Award of “temporary custody to plaintiff

for 4 months, then permanent custody to defendant” held to be a final order

Lamond v. Mahoney (COA Aug. 2003) “Order regarding permanent custody,

visitation and support” was temporary where it ordered evaluations and review in 7 months

CustodyAppeals

Evans v. Evans (COA June 2003) Custody order is interlocutory if alimony

and ED remain pending No substantial right affected unless

child’s “health or safety is in jeopardy” Compare McConnell, 151 NC App 622 (2002)

Civil Procedure Rule 54(b): judge can certify “no just reason to delay the appeal”

Child SupportModification

Orange County ex. Rel. Harris v. Keys (COA June 2003) VSA included order to pay $1,272

($20 per month) reimbursement of past paid public assistance

Trial court forgave repayment as part of modification of VSA after finding debt accrued before obligor knew about birth of child

Child SupportModification

Orange County ex rel Harris v. Keyes COA reversed – held modification of “vested

arrears” must comply with GS 50-13.10 GS 50-13.10: payments become vested

when due; modification allowed only if requested before payments due

After vesting, obligor must show “compelling reason” why change not requested before payments due

Child SupportImputing Income

Cannot impute income without finding “bad faith”: finding of intentional reduction is not sufficient

Cook v. Cook (COA Aug. 2003). Obligor left job voluntarily and restructured investments: insufficient to impute

Pataky v. Pataky (COA Sept 2003): left job to return to school – COA said record “wholly lacks evidence of bad faith”

Child SupportSeparation Agreement

Pataky (COA Sept. 2003) Amount of support in unincorporated

agreement is presumed a “just and reasonable” amount of support

If presumption not rebutted, application of guidelines is “inappropriate” and support is set in amount of agreement

Rebut presumption with evidence of needs of children at time of hearing and factors set out in GS 50-13.4(c)

Child Support Legislation

Collection of arrears S.L. 2003-288, effective July 4, 2003 Amends GS 50-13.4(c): If arrearage

exists when support obligation terminates, payments continue in same total amount until all arrearages and fees are satisfied

Equitable DistributionRice v Rice (COA Aug. 2003)

House purchased with down payment and mortgage before marriage

Mortgage paid during marriage with marital and separate funds

Improvements made during marriage with marital and separate funds

Passive appreciation added value during marriage

How classify house?

Equitable Distribution

Mixed assets classified using source of funds doctrine

Each estate is entitled to an interest in the property in the ratio its contribution bears to the total investment in the property. Wade, 72 NC App 372 (1985) Mishler, 90 NC APP 72 (1988)

Equitable Distribution

To classify a mixed asset: Identify total marital contribution Identify total separate contribution Divide passive appreciation between

the 2 estates based upon the relative contribution of each

Equitable Distribution

Rice v. Rice (COA Aug 2003) In determining total marital

contribution – for purpose of identifying marital component of passive appreciation – must include marital improvements as well as marital mortgage payments

Equitable DistributionDistributive Awards 50-20(e)

In-kind distributions presumed equitable Presumption rebutted by greater weight

of evidence, or of evidence of property “not susceptible to in-kind distribution”

If rebutted, distributive award allowed to “facilitate, effectuate, or supplement distribution”

Can be paid over time/secured with lien

Distributive Awards

Embler v. Embler (COA July 2003) Defendant ordered to pay $24,876 within 60

days COA held trial court erred by not identifying

how defendant would satisfy award where defendant had no “obvious liquid assets.”

See also Shaw v. Shaw, 117 NC App 552 (1995) Ability to pay is not the issue

Distributive AwardsEmbler v. Embler

If court cannot identify liquid assets to pay award, must identify non-liquid source of funds Ex. retirement funds or loans

If non-liquid source used, court must consider “adverse financial ramifications” as distribution factors 50-20(c)(9): must consider liquid/non-liquid

character of assets 50-20(c)(11): must consider tax consequences

of distribution

Equitable DistributionEmbler v. Embler

Court’s findings regarding distribution factors were insufficient

Identified factors lacked detail – examples: Husband paid debts, but amount not identified Husband had separate property, but no finding

whether liquid or non-liquid No QDRO desired, but no finding re tax

consequences of “dipping into” retirement account

Statement that court “also considered the other factors” created ambiguity

Equitable DistributionPension classification

Award of pension determined using proportion of time marriage existed (up to date of separation), simultaneously with employment which earned the pension, to the total amount of time of employment. GS 50-20.1(d)

Referred to as the “coverture fraction” Bishop, 113 NC App 725 (1994) Lewis, 83 NC App 438 (1986)

Pension classification

Embler v. Embler Entire pension classified as marital even

though 8 years (1/3 of total in this case) accumulated before marriage because defendant failed to introduce evidence of the value of the pension on the date of marriage

Compare Gagnon, 149 NC App 194 (2002) and Atkinson v. Chandler, 130 NC App 561 (1998) – both holding coverture fraction is required even when value actually earned by pre-marital effort.

Domestic ViolenceEagle v. Johnson (COA Aug 2003)

Court’s dismissal of 50B claim in another county may bar subsequent 50B action based on same facts

Res judicata applies if defendant proves Final judgment entered in earlier case Identical causes of action in both cases Identical parties (or parties in privity) in

both case

ContemptMiddleton (COA July 2003)

Civil contempt appropriate where defendant “thwarted sale of marital residence” thereby violating the “spirit and intent” of ED order

Compare Scott v. Scott (COA May 2003) No contempt for conduct not

specifically prohibited by custody order

Civil Procedure

Chillari (COA Aug. 2003) Objection to venue waived if not filed

within 30 days of service of process Scruggs v. Chavis (COA Sept. 2003)

When notice of hearing and final motion calendar conflict, motion calendar controls

“Fundamental principle: civil calendars set by court and not by lawyers”

Collaborative law

S.L. 2003-371 creates new GS 50-70 through 79: “Collaborative Law Proceeding”

Effective October 1, 2003 Voluntary settlement procedure for

all issues arising from divorce except absolute divorce

Collaborative Law

Parties and counsel agree in writing to make good faith attempt to resolve all issues without court intervention

If successful, parties entitled to judgment to effectuate terms of agreement

If unsuccessful, can continue or initiate court proceedings

Collaborative Law

If process is not successful: Attorneys are prohibited from

representing parties in future court proceedings, and

Attorney and expert work product and communications not admissible in litigation without agreement of parties

Collaborative Law

If case pending in court when agreement to collaborate is signed, notice must be filed with court

Upon filing of notice, “the court shall take no further action in the case, including dismissal” until notified that procedure is complete

Collaborative Law

A valid agreement to engage in the collaborative procedure tolls “all legal time periods applicable to legal rights and issues under law between the parties” while agreement remains in effect – including Statutes of limitations Filing deadlines Discovery and scheduling orders