Bridgers v. Cherry

• Court: Maryland Court of Appeals
• Writing for the Court: Opinion by Arthur, J.
• Decision Date: 05 August 2019
• Docket Number: No. 786,786
• Citation: Bridgers v. Cherry, No. 786 (Md. App. Aug 05, 2019)
• Parties: ELESHA CHERRY BRIDGERS v. ELMER CHERRY

ELESHA CHERRY BRIDGERS
v.
ELMER CHERRY

No. 786

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2017
August 5, 2019

Circuit Court for Baltimore County
Case No. 03-C-09-009367

UNREPORTED

Berger, Arthur, Shaw Geter, JJ.

Opinion by Arthur, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

Page 2

This case concerns the proper calculation of a parent's child support obligation. The Circuit Court for Baltimore County determined that the parent violated a previous order requiring her to pay 13 percent of any "gifts from trust" as additional child support. The circuit court also modified the parent's child support obligation, upon finding that her income had materially increased. The court treated all distributions from trusts, including distributions of principal, and certain distributions from a limited liability company, including distributions from a capital account, as "actual income" for the purposes of determining the parent's child support obligation.

The parent has appealed. For the reasons stated in this opinion, we shall vacate the circuit court's judgment and remand the case for a redetermination of the parent's child support obligations. We shall also vacate an accompanying award of attorneys' fees against her.

BACKGROUND

Ms. Bridgers and Mr. Cherry were married on May 22, 1994. They are the parents of one child, a son, who was born on November 24, 2000. Ms. Bridgers also has a daughter from a previous marriage.

Ms. Bridgers and Mr. Cherry separated in 2004. At some point thereafter, while Ms. Bridgers was living in North Carolina, she initiated a proceeding concerning child support.

Page 3

The North Carolina proceeding culminated in an order dated September 25, 2007. In that order, the North Carolina court awarded sole physical custody of the child to Mr. Cherry and ordered Ms. Bridgers to pay $257.00 per month in child support.¹

Because Ms. Bridgers had received "exclusion gifts"² in the amount of $12,000.00 in 2005 and 2006 from a revocable trust controlled by her grandmother, Esther Gordy Edwards, the North Carolina order contained a provision that required her to pay "additional child support" if she received such gifts in the future:

In the event that [Ms. Bridgers] receives a gift from trust and/or from the Esther Gordy Edwards Trust or any other in 2007 or in any year hereafter in which she is obligated to pay child support to [Mr. Cherry], she shall pay directly to [Mr. Cherry] as additional child support thirteen percent (13%) of the amount she receives within seven (7) days of receipt of that money.

We shall refer to that clause of the North Carolina order as the "13 percent provision."

When the North Carolina court entered its order, both Ms. Bridgers and Mr. Cherry had moved to Maryland. In 2009 Ms. Bridgers filed for divorce in Baltimore County, where she lived.

Page 4

In 2010 the Circuit Court for Baltimore County entered a judgment of absolute divorce. The Baltimore County judgment required Ms. Bridgers to pay child support pursuant to the North Carolina order.

Between January 2006 and January 2011, Ms. Bridgers received annual exclusion gifts in the following amounts from her grandmother's trust:

January 30, 2006	$12,000.00
January 22, 2007	$12,000.00
January 10, 2008	$12,000.00
January 9, 2009	$13,000.00
January 15, 2010	$13,000.00
January 2011	$13,000.00

After her receipt of the exclusion gifts in 2008, 2009, 2010, and 2011, Ms. Bridgers paid $1,300.00 to Mr. Cherry. Each of those payments totaled less than 13 percent of the "gifts from trust" that the North Carolina order required her to pay.

Ms. Bridgers's grandmother died in August 2011. At that time, her grandmother's trust became irrevocable, and Ms. Bridgers became the beneficiary of an "issue trust"³ that was established under the documents that governed her grandmother's trust. We shall refer to Ms. Bridgers's issue trust as the "Elesha Trust."

Page 5

On December 15, 2011, the Elesha Trust was funded through its receipt of $177,800.00 from Ms. Bridgers's grandmother's trust. In 2013, after the death of Ms. Bridgers's father, the Elesha Trust received additional assets valued at $109,779.50, apparently from an issue trust that her grandmother had established for Ms. Bridgers's father.

Ms. Bridgers is the beneficiary of the Elesha Trust. She is not a trustee, and she does not have legal title to the assets held in trust. The trustees of the Elesha Trust are J.P. Morgan Chase and Ms. Bridgers's sister.

The trustees of the Elesha Trust must distribute an annual amount equal to five percent of the fair market value of the trust's assets. In addition, the trustees may, in their discretion, make additional distributions from the principal of the trust if the income is insufficient for the health, maintenance, support, and education of Ms. Bridgers or her dependents or if Ms. Bridgers needs the funds for some specific purpose, such as purchasing a residence or continuing her education. Ms. Bridgers has received discretionary distributions from the principal of the trust, including distributions to pay nearly $100,000.00 in attorneys' fees in this case and to pay a $100,322.00 tax liability that she and her husband incurred when he lost his job and was forced to liquidate his retirement assets.

Meanwhile, in November 2006, before the entry of the North Carolina order, Ms. Bridgers's grandmother, Esther Gordy Edwards, had established EGBE Family LLC. Ms. Edwards's trust contributed just under $16 million to the LLC and was, at first, its sole member. On December 22, 2006, again before the entry of the North Carolina order,

Page 6

the trustees of Ms. Edwards's trust authorized the distribution of minority interests in the LLC to members of Ms. Edwards's family, including Ms. Bridgers. Ms. Bridgers originally had a 2.128 percent interest in the LLC, but in 2013, after her father's death, she received an additional interest from his estate, which brought her interest in the LLC to 3.3753 percent. Ms. Bridgers has received interest, dividends, and capital gains from the LLC, as well as distributions from her capital account in the LLC.

In May 2013 Mr. Cherry moved to enroll the North Carolina order in Baltimore County. The circuit court enrolled the North Carolina order in August 2013.

At the same time that he moved to enroll the North Carolina order, Mr. Cherry filed a petition for contempt, in which he alleged that Ms. Bridgers had violated the 13 percent provision of the North Carolina order. In support of that allegation, Mr. Cherry asserted that Ms. Bridgers had failed to pay 13 percent of all "disbursements" from her grandmother's trust, or any other trust.

In December 2013 Mr. Cherry filed a complaint to modify Ms. Bridgers's child support obligation. In that complaint he alleged that Ms. Bridgers's income had increased materially since 2007. In support of that allegation, Mr. Cherry asserted that Ms. Bridgers's income included, among other things, "trust distributions" and distributions from the LLC.

The parties went to trial on the petition for contempt and the complaint to modify the child support obligation in late 2015. At the trial, Mr. Cherry's expert, Karen May, C.P.A., prepared what she called an analysis of Ms. Bridgers's income, in which she

Page 7

listed every distribution Ms. Bridgers had received from the Elesha Trust and from the LLC.

Ms. May's computation of trust "income" included distributions of trust principal, including extraordinary distributions to pay tens of thousands of dollars in attorneys' fees in this case and to pay the six-figure tax obligation that Ms. Bridgers and her new husband had incurred when a financial emergency required him to liquidate his retirement assets. According to Ms. May, Ms. Bridgers received trust "income" in the following amounts from 2013 through 2015:

2013	$33,826.50
2014	$123,545.98
2015	$217,918.17

In Ms. May's computation, Ms. Bridgers's trust "income" totaled $375,290.65 during those three years.

Ms. May's computation of "income" also included all distributions from the LLC, including distributions that entailed the return of capital from Ms. Bridgers's capital account and a $385,000.00 loan from the LLC. According to Ms. May, Ms. Bridgers received the following amounts of "income" from the LLC in 2013 through 2015:

2013	$428,099.00
2014	$65,890.00
2015	$98,149.50

Page 8

In Ms. May's computation, Ms. Bridgers's "income" from the LLC totaled $592,138.50 during those three years.

Ms. Bridgers's expert, Mary-Kay Leary, disputed much of Ms. May's analysis. In particular, Ms. Leary exempted distributions of principal from the computation of Ms. Bridgers's trust income. Similarly, Ms. Leary exempted the return of capital, as well as the loan, from the computation of Ms. Bridgers's income from the LLC.

In Ms. Leary's opinion, Ms. Bridgers received $6,140.00 in "income" from the Elesha Trust from 2012 to 2014. Ms. Leary said that she could not compute Ms. Bridgers's trust income for 2015 until the year had ended, and the trust had determined how much income it had earned. The undisputed facts in the record establish that as of September 30, 2015, just before the trial began, the Elesha Trust contained only $948.44.

According to Ms. Leary, Ms. Bridgers received the following amounts of "income" from the LLC in 2013 through 2015:

2013	$16,851.00
2014	$34,020.00
2015	$19,285.00

According to Ms. Leary, Ms. Bridgers's actual income from 2012 through 2014 (the last complete year) was as follows:

2012	$49,254.00
2013	$43,274.00
2014	$32,152.00

Page 9

Ms. Bridgers had had no income from employment since 2012.

The circuit court largely accepted Ms. May's accounting. It ruled...