Arnold, Wadsworth & Coggins Divorce Case Update

October 17, 2016
Arnold Wadsworth Coggins

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Ouk v. Ouk

2015 UT App 104

Facts:

  1. Were divorced in 2009
  2. Husband appeals decisions on distribution of marital property, child support and attorney fees.
  3. Wife filed divorce in 2007
  4. 2nd trial in 2012 with additional issues
  5. Child support per month for two children
  6. Judgement for unpaid child support further order of $100,000 for dissipation of marital assets
    1. Husband dissipated funds from line of credit, and from the proceeds and from sell of the car
  7. Husband was ordered to pay attorney’s fees in the amount of $95,000

Issue Number 1

  1. If the trial court properly decided child support.
    1. Husband contends that the trial court erred in calculating the amount he was required to pay because the court failed to deduct necessary business expenses from Husband’s gross income.
    2. Husband argues that the trial court should have found that Husband was “voluntarily unemployed or underemployed prior to deciding to impute income,” and that the trial court “failed to articulate any findings with regards to Husband’s employment potential and probable earnings.

Ruling Number 1

  1. The trial court in a divorce action is permitted considerable discretion in adjusting the financial and property interests of the parties, and its actions are entitled to a presumption of validity.
  2. A noncustodial parent’s child-support obligation is calculated using each parent’s adjusted gross income.
    1. When a parent is self-employed or operates a business, “gross income . . . shall be calculated by subtracting necessary expenses required for self-employment or business operation from gross receipts.”
  3. Only those expenses necessary to allow the business to operate at a reasonable level may be deducted from gross receipts.
  4. A person is voluntarily unemployed or underemployed when he or she intentionally chooses of his or her own free will to become unemployed or underemployed.

Analysis Number 1

  1. Because Husband failed to meet his burden of proving that these expenses were necessary to operate his business, the trial court did not abuse its discretion in refusing to subtract those expenses from his gross income.
  2. The trial court did not conclude that Husband was intentionally working less or actually earning less money, but rather that Husband was being deceitful about his income due to the inconclusive and unreliable documentation of current income he had filed with the court. The trial court credited neither.
  3. The court also found Husband’s claim of impecuniosity not credible and accordingly denied Husband’s request to use the minimum wage as his income level for purposes of calculating child support.
  4. To determine the Husbands monthly income, the court used the amounts contained in Husband’s sworn financial declarations and averaged his reported monthly salary from 2009 to 2011 in order to arrive at an appropriate estimate of Husbands actual monthly income.

Issue #2

  1. Courts determination that he dissipated marital assets
    1. Husband argues only that the trial court erred in finding that Husband dissipated the funds from the line of credit.
    2. Husband argues that “no evidence was presented that showed that the line of credit was used for anything other than running GMA, or was used personally or for some nefarious purpose.”
    3. Husband claims that because the court found that GMA was a marital asset, no other evidence was necessary to demonstrate that the funds were used for a marital purpose.

Ruling #2

  1. The trial court in a divorce action is permitted considerable discretion in adjusting the financial and property interests of the parties, and its actions are entitled to a presumption of validity.
  2. After initial showing apparent dissipation by one party, the burden shifts to the other party “to show that the funds were not dissipated, but were used for some legitimate marital purpose.
  3. If the court finds that a spouse has dissipated marital assets, “the court should calculate the value of the marital property as though the assets remained.”
  4. If “a spouse’s behavior prevents the court from determining the precise amount of dissipated assets, the court should estimate, to the best of its ability, the upper limit of the amount of assets that the spouse may have dissipated.
  5. The fact-finder is in the best position to judge the credibility of witnesses and is free to disbelieve their testimony. Even where testimony is uncontroverted, a trial court is free to disregard such testimony if it finds the evidence self-serving and not credible.

Analysis #2

  1. Thus, this court will not disturb a court’s “distribution of marital property unless it is clearly unjust or a clear abuse of discretion.”
  2. The trial court did not find Husband’s evidence to be credible from the testimony of an accounting expert about the $185,000 from a Credit line
  3. Husband bore the evidentiary burden, which he cannot meet by pointing to a lack of contrary evidence.
  4. The trial court found that Husband did not meet his burden at trial to provide any evidence or documentation proving that all of the proceeds from the line of credit went into GMA and that the money was spent for the business.
  5. The trial court ultimately determined that Husband was not forthcoming about the use of the full $184,000.
  6. The trial court found that Husband “treated all businesses and business assets as his personal assets and used them at will for his personal use and expenditures, as well as for business purposes”
  7. Testimony of Husbands expert witness that the loan was “on the GMA side” does nothing to explain how the money was actually spent. With no evidence of how the funds were actually used.
  8. Trial court did not abuse its discretion in finding that Husband had dissipated marital assets.

Issue #3

  1. The trial court’s award of attorney fees to Wife

Ruling #3

  1. A trial court in a divorce proceeding may “order a party to pay the costs and attorney fees . . . of the other party to enable the other party to prosecute or defend the action.” Both the decision to award fees and the amount of such fees are within the trial court’s discretion. However, “the award or denial of such fees must be based on evidence of the financial need of the receiving spouse, the ability of the other spouse to pay, and the responableness of the requested fees.”

Analysis #3

  1. Court determined that Husband could pay what Wife could not. The court found that Wife was unable to pay her attorney fees because Wife was earning an income “barely sufficient to meet her needs.”
  2. The trial court also found that Husband had millions of dollars in business assets and that Husband was unable to provide reliable and credible evidence to support his claims of poverty.
  3. The trial court found not credible Husband’s claim that he should not and could not pay these obligations.