Closely Divided Supreme Court Finds Error of Law in Child Support Appeal, but Still Affirms; Trial Counsel’s Efforts Described as “Herculean.”

The Arkansas Supreme Court decided the appeal in Tammye Hall v. Justin Hall by a 4-3 vote last week (September 19, 2013).   A link to the decision and dissent is here:

http://opinions.aoc.arkansas.gov/WebLink8/0/doc/317680/Electronic.aspx

This is the second reported decision in this case.  See Hall v. Hall, 2012 Ark. 429 (Dismissing cross appeal because of voluntary partial payment of judgment).

http://opinions.aoc.arkansas.gov/WebLink8/ElectronicFile.aspx?docid=309809&dbid=0

The Supreme Court recited the trial court’s finding that Justin Hall willfully concealed marital funds in order to decrease the amount of money to be divided in the divorce, and that his actions were egregious, calculated, and a direct affront to the court and to Tammye.  But in addition to the division of hidden marital funds that Tammye won, she was also seeking increased child support based on Justin’s hidden income.  The trial court denied the increase in child support, reasoning that it could not determine if the hidden funds were regular sources of income or one time payments.

All seven Justices agreed this was “clearly a misstatement of the law…” (Id. at 5; Dissent at 4).

Income for purposes of child support is intentionally broad and designed to encompass the widest of sources.  For purposes of child support, even one-time income such as judgments, gifts, retirement payments, and gambling winnings are included as income.  Despite the clearly erroneous statement of law by the trial court, the majority (Danielson, Hannah, Hart, and Hoofman) held that other factors justified the denial of the motion to increase child support, and affirmed.  Specifically, the four-justice majority cited to that fact that Tammye entered into an agreement on child support because she knew it would be difficult to determine Justin’s income from his self-employment (Hall Engineering), and that the fraudulently hidden funds were derived in 2009 and 2010.

The dissent by Justice Goodson (joined by Corbin and Baker) quotes the verbatim language of the trial court’s order, and the arguments made by Tammye on appeal on what the majority characterized as alternative holdings.  First, Tammye raised the fact that her agreement on child support (which was premised on Justin’s fraud) is not binding.  The trial court always has authority to modify child support even if the parties have entered into an agreement.  Rockefeller v. Rockefeller, 335 Ark. 145 (1998).  Tammye also argued that any agreement premised on a fraudulent disclosure is void.

Finally, the majority’s reliance on the date of the hidden income is misplaced.  Tammye and Justin were divorced in March of 2010 (based on an agreement entered in December 2009).   Tammye filed her motion for increased child support in May of 2011.  The majority opinion cites the fact that the hidden income was derived in 2009 and 2010 as justification for denying the motion.  Yet Tammye made a specific argument supported by caselaw that increased child support should be retroactive to the date of the date of the fraud – December 2009.  Administrative Order 10(c) says child support for self-employed payors shall be calculated based on the last two years’ income and the current year’s quarterly estimates.  Applying the Supreme Court’s Administrative Order, Tammye was obligated to produce proof of Justin’s income in 2009 and 2010 to calculate the support due under the chart guidelines for 2011.   The fact that Justin hid income from 2009 and 2010 favors Tammye’s position, not Justin’s.   How could income from 2010 not be relevant to calculating the true support that should have been paid in 2010?

More broadly, it is troubling that this decision may carve out a peculiar fact-based exception to the longstanding policy of the State to protect the interests of children by broadly defining income for child support purposes and preventing litigating parents from bargaining away the support that is due under the law for a child.  It also seems to reward Justin’s fraud by refusing to impute as income for child support purposes the funds he fraudulently hid from Tammye and the trial court.  Perhaps these issues can be clarified if the Supreme Court grants rehearing.

I was pleased to represent Tammye on appeal, but Justice Goodson properly credited Tammye and her trial attorney, Lucas Rowan, on their determination in this case:  “It took a Herculean effort to unravel Justin’s deceit and to produce an accounting of Justin’s income.”  Id. at 5.

Tim Cullen

September 23, 2013

Supreme Court Appoints a Special Task Force

On August 2, 2013, the Arkansas Supreme Court issued a per curiam opinion appointing a ten member task force to:

[r]eceive input on any perceived problems with and recommended changes to the Arkansas Rules of Civil Procedure involving parties, liability, and damages in civil litigation involving negligence, medical malpractice, and related cases.

(http://opinions.aoc.arkansas.gov/WebLink8/0/doc/317064/Electronic.aspx

The per curiam acknowledges political pressure in the last session of the General Assembly, and controversy over recent decisions of the Supreme Court.  No specifics are given, but presumably this is a reference to the confusion that began with the legislative abolition of joint and several liability in the Civil Justice Reform Act of 2003.  The confusion continued when the Court struck down parts (but not all) of the CJRA (Johnson v. Rockwell Automation, Inc., and other cases).  Cases this term (Metheny and Shelton) added pieces to the evolving puzzle, but did not solve it.  The legislature weighed in again with Act 1116, Arkansas Acts of 2013, overruling parts of Shelton (creating a right of allocation of fault among joint tortfeasors).

The per curiam briefly discusses the Civil Practice Committee’s role in vetting changes to the Rules of Civil Procedure, and the history of the bar working together to produce procedures for a fair court system.  The per curiam notes that no one has offered any proposals to the Civil Practice Committee on these issues:  “We note that there have been no recent recommendations submitted to the court or the committee concerning “damages and/or liability in civil litigation.”  Id. at 2.  The per curiam calls this a “failure” of those interested in these issues to submit their concerns to the court.

The task force is directed to submit its report and recommendations by December 31, 2013.

Annual Recommendations of the Committee on Civil Practice

SUPREME COURT OF ARKANSAS — IN RE RECOMMENDATIONS OF
THE COMMITTEE ON CIVIL PRACTICE
Per Curiam Opinion Delivered June 20, 2013
2013 Ark. 278

Click here for the full text: http://opinions.aoc.arkansas.gov/WebLink8/0/doc/316775/Electronic.aspx

This per curiam contains the recommendations of the Supreme Court’s Civil Practice Committee for rule changes.  The per curiam contains the proposed changes in a line-out format so it is easy to see what amendments are proposed.   Many of the changes are minor matters.  One change clarifies that motions in the appellate courts need not be bound like a brief, but can simply be stapled in the corner.   A prior change to Rule 2-1 said that motions had to be bound like a brief, but in practice the clerk’s office preferred that motions only be stapled to make it easier to scan them to a PDF.   Another change requires only one redacted copy of a brief that includes confidential information under Administrative Order 19.    Rule 4-1 and 4-4.   Another change (Rule 4-2) requires that multi-volume briefs be clearly labeled by volume.   The court’s practice that an appeal will not be dismissed upon motions of the parties or notice of settlement if the appeal has been submitted for decision is now codified in Rule 4-4(e).

Rule 6 of the Rules of Appellate Procedure – Civil is amended to say that stipulations or motions to supplement the record must be made within 30 days of the filing of the opening brief.

Rule 9 of the District Court Rules is amended extensively to clarify the process for bringing an appeal from a district court to a circuit court.

Lastly, the committee recommended some changes to the official probate forms.

Comments on the suggested rules changes should be made in writing before July 31, 2013 to:

Leslie W. Steen, Clerk, Supreme Court of Arkansas

Attn.: Civil Procedure Rules

Justice Building

625 Marshall Street

Little Rock, Arkansas 72201

New Cover Sheets Required for Appeals

“The Clerk of the Supreme Court and Court of Appeals is implementing a new case
management system, and in connection with this system, the clerk studied the use of cover
sheets in initiating cases. Cover sheets have been in use in our circuit courts for a number of
years, but they are not required in our appellate courts. The clerk has determined that in
performing the various tasks required when a case is opened and for subsequent case
management, a cover sheet to accompany an initial filing would be beneficial.”

IN RE ADOPTION OF SUPREME COURT AND COURT OF APPEALS RULE 3-7. COVER SHEET, 2013 Ark. 277.

Effective August 1, 2013, any record or initial pleading filed in the appellate court must also include a cover sheet.  The Administrative Office of the Courts will be responsible for the contents and format of the cover sheet.

http://opinions.aoc.arkansas.gov/WebLink8/0/doc/316758/Electronic.aspx

New Rule 1-8 Effective August 1, 2013

Starting August 1st, all briefs and motions filed in Arkansas appellate courts must also include a PDF file.   Here is an excerpt from the new rule:

 

(a) Motions, petitions, writs, briefs, responses, and replies filed in the appellate court, except those filed by a party proceeding pro se or by a party who by court order has been allowed to prosecute the suit in forma pauperis, shall be submitted with an electronic copy of those documents in Adobe Portable Document Format (PDF).  Submissions in PDF of circuit court records or parts of records filed in the appellate court is encouraged but not required.  Submission of PDF documents in text-searchable Adobe Portable Document Format is also encouraged by not required.

The new rule also proscribes requirements for naming the electronic file.   For now, section (f) requires the PDF files be submitted on a disc or flash drive.  The Reporters Notes state this is a “transitional step toward the anticipated requirement of electronic filing of documents in the Arkansas appellate courts (See Administrative Order 21 – Electronic Filing).   The full per curiam can be found here: Rule 1-8

 

 

Electronic Filing in Arkansas Appeals

From the Arkansas Judiciary website:

In anticipation of coming e-filing, the Supreme Court will allow filers to submit electronic versions of filings in addition to traditional paper filings, starting August 1. Pilot program for electronic briefs will end July 31.

https://courts.arkansas.gov/announcements/anticipation-coming-e-filing-supreme-court-will-allow-filers-submit-electronic

A Sharply Divided Arkansas Supreme Court on Preservation Pitfalls

On May 16, 2013, the Arkansas Supreme Court issued a decision in TEMCO v. Gann, 2013 Ark. 202.   Like many decisions this term, the Court was sharply divided, with two dissents joined by three members of the Court.  The crux of the decision was whether three of the four points raised on appeal were preserved for appellate review.  Quoting from the 4-judge majority:

In summary, we reiterate that the motion to dismiss was based on several grounds, yet the circuit court granted dismissal based on only one of those several grounds—that the complaint was barred by statute, specifically section 18-44-115(a)(4), due to TEMCO’s failure to give sufficient notice. That is the only ruling the circuit court made. TEMCO argues reversal based on other arguments that were raised below, but not ruled on. As Appellant, it was TEMCO’s burden to obtain or insist on rulings on issues it desired to have reviewed on appeal. See Meador v. Total Compliance Consultants, Inc., 2013 Ark. 22, ___ S.W.3d ___; see also Ghegan & Ghegan, 345 Ark. 514, 49 S.W.3d 652. Alpha Marketing and Ground Zero are very clear that this court will not presume rulings based on a trial court’s silence. Ghegan & Ghegan is very clear that we will not presume a ruling based on a trial court’s general observations. This court is bound to follow these cases and is therefore precluded from reaching the merits of the arguments raised in this appeal, save the attorneys’ fees argument which is rendered without merit due to our summary affirmance.
The orders of the circuit court are affirmed.

Compare that to the Chief Justice’s dissent (joined by Baker and Hart):

Here the circuit court stated that it had considered all arguments, pleadings, briefs, and exhibits and it ruled.  To now conclude that the circuit court did not rule, when it expressly states that it did rule, is error. This decision puts counsel in an untenable position that counsel will be held responsible for the failure to obtain a ruling under the very narrow principles set out by the majority. This means that counsel must persuade the circuit-court judge that an extremely detailed, and finite written order must be issued. While counsel are sometimes assigned by the circuit court to draft a precedent, that is not always the case. Even if counsel were to always draft the precedent, there will be disputes between counsel and the circuit court, which will result in matters coming before this court under its original jurisdiction. This court will be faced with petitions to compel the circuit court to act in a manner that counsel believes is required by the majority’s decision. Overcrowded circuit-court dockets and overworked circuit-court judges will be compelled to engage in needless extra work. Counsel will be put in the unenviable position of having to challenge circuit judges before whom they customarily practice.

COMMENTARY:  This decision illustrates the difficulty counsel faces whenever more than one issue is raised to a trial court in a summary judgment or motion to dismiss context.  TEMCO holds that the following language:

“[t]he parties came before this Court to be heard on Defendants’ Motion to Dismiss. Upon consideration of all arguments, pleadings, briefs, and exhibits, this Court finds that the Defendants’ Motion to Dismiss should be and hereby is GRANTED.”

is not good enough to to preserve alternative arguments that were raised, briefed and argued. Counsel must find a way to obtain a detailed and specific ruling on all alternative arguments that were raised, even if those arguments are not the basis for the trial court’s ruling.  The Chief Justice’s dissent says this will put counsel in the “untenable” position of routinely forcing trial courts to issue “extremely detailed and finite written order[s]” on arguments they have summarily rejected.

The full decision can be found here: http://opinions.aoc.arkansas.gov/WebLink8/0/doc/316039/Electronic.aspx