Crew v. Tillotson

• Decision Date: 20 August 2019
• Docket Number: NO. 2017-CA-01011-COA,2017-CA-01011-COA
• Citation: 282 So.3d 776
• Parties: Lisa Diann CREW, Appellant/Cross-Appellee v. Sidney Ellis TILLOTSON Jr., Appellee/Cross-Appellant
• Court: Mississippi Court of Appeals

282 So.3d 776

Lisa Diann CREW, Appellant/Cross-Appellee

v.Sidney Ellis TILLOTSON Jr., Appellee/Cross-Appellant

NO. 2017-CA-01011-COA

Court of Appeals of Mississippi.

August 20, 2019

ATTORNEYS FOR APPELLANT: MARTY CRAIG ROBERTSON, WILLIAM CLINTON PENTECOST, ROBERT MARVIN PEEBLES

ATTORNEYS FOR APPELLEE: B. BLAKE TELLER, JOSHUA LAWRENCE DIXON

BEFORE CARLTON, P.J., TINDELL AND McDONALD, JJ.

TINDELL, J., FOR THE COURT:

¶1. A North Carolina court granted Sidney Ellis Tillotson Jr. (Ellis) and Lisa Crew a divorce. Lisa then filed a complaint for equitable distribution in the Warren County Chancery Court. Relevant to this appeal, the chancellor determined that certain stock and other assets Ellis acquired during the marriage from Tillotson Enterprises Inc. (TEI) failed to constitute marital property. On appeal, Lisa argues the chancellor erroneously classified TEI's stock and other assets as nonmarital property, which resulted in an inequitable distribution of the marital estate. On cross-appeal, Ellis contends the chancellor erred by not finding that Lisa's complaint for equitable distribution was barred by res judicata. Finding no error, we affirm the chancellor's judgment.

FACTS

¶2. Lisa and Ellis married in December 1978. During their marriage, they had two sons and resided in Vicksburg, Mississippi. The parties separated on September 21, 2013. On December 4, 2013, Lisa filed a divorce complaint with the Warren County Chancery Court. Ellis responded and counterclaimed for separate maintenance, spousal support, and other relief.

¶3. In January 2014, Lisa moved to North Carolina. In a complaint dated October 21, 2014, she filed for divorce in North Carolina. Lisa's North Carolina divorce complaint made no request for equitable distribution. On January 15, 2015, Lisa filed a motion with the Warren County Chancery Court to dismiss her Mississippi divorce complaint without prejudice. On February 17, 2015, the Warren County Chancery Court granted Lisa's motion and dismissed her Mississippi divorce complaint without prejudice.

¶4. In a May 1, 2015 judgment, a North Carolina court granted the parties a divorce. Six days later, on May 7, 2015, Lisa filed a complaint with the Warren County Chancery Court for equitable distribution and other relief. Lisa asked that the chancellor give full faith and credit to the North Carolina divorce decree "and proceed to determine the financial components of the dissolution of the parties' marriage." Ellis answered and denied that Lisa was entitled to any relief. He also moved to dismiss Lisa's complaint on the basis that her failure to raise equitable distribution in the North Carolina divorce proceeding barred the issue in any subsequent proceeding.

¶5. On December 7, 2015, the chancellor entered a final judgment on Ellis's motion to dismiss. The chancellor found that Lisa's failure to request equitable distribution in the North Carolina court neither waived the issue nor barred her from raising it in the current proceeding. The chancellor determined that the North Carolina court lacked the authority to divide the parties' marital estate because the court possessed neither personal nor in rem jurisdiction over Ellis. The chancellor therefore denied Ellis's motion to dismiss. Ellis filed an unsuccessful motion to reconsider the denial of his motion to dismiss. He then unsuccessfully sought an interlocutory appeal from the Mississippi Supreme Court.

¶6. In March and September 2016, the chancellor held a five-day trial on Lisa's complaint for equitable distribution of the marital estate. During the course of the trial, the parties signed an agreed order giving Ellis exclusive ownership of the former marital home in Vicksburg. Following the trial's conclusion, the chancellor entered a 91-page memorandum opinion and final judgment on June 21, 2017.

¶7. The chancellor found that in 1991 Ellis and Lisa formed a partnership titled E&L Plantation through which Ellis continued his ongoing work of farming certain properties he leased from others. While Lisa never farmed on the property or operated any equipment, she did perform some bookkeeping for E&L Plantation. E&L Plantation was formed at a time when Ellis's father, Sidney Ellis Tillotson Sr. (Senior), sought to purchase some land. Senior used equipment he had accumulated as collateral for a farm loan that E&L Plantation obtained. Senior later acquired about 1,200 acres of land from Sim Ramsey Jr. for $780,000. E&L Plantation paid Senior $25,000 in rent for property that the partnership rented from Senior. Ellis testified that he used the farm loan obtained by E&L Plantation to pay Senior the $25,000 in rent. Ellis's brother, Mark Tillotson, and a tenant named Roy Goode also paid $25,000 each in rent to Senior. Senior used these rent sums, plus another $25,000 that he provided himself, to make the $100,000 down payment on the 1,200 acres. Pursuant to a deed of trust executed by Senior, Ramsey financed the remaining $680,000 for Senior to purchase the land.

¶8. In May 1994, Senior formed TEI. The corporation issued 333 and 1/3 shares of stock each to Senior, Ellis, and Mark. Also in 1994, Senior signed a deed and conveyed certain property he had purchased from Ramsey to TEI. Ellis testified that around 1995 his father and brother both began to experience serious financial problems. Senior and Mark eventually surrendered their stock, which totaled 666 and 2/3 shares, back to TEI. As a result, on January 3, 1996, Ellis became TEI's sole shareholder.

¶9. Ellis testified that he farmed under E&L Plantation until Lisa filed for a divorce. According to Ellis, E&L Plantation's profits were used to pay bills for the marital household. E&L Plantation rented TEI's property. In 1995, E&L Plantation lost money, and Ellis and Lisa used $30,000 from Lisa's 401K account to keep the partnership afloat. Some of the money was also used to remodel the marital home, which the parties used as collateral for E&L Plantation in 1996. Lisa testified that she was not responsible for the debt on any businesses other than E&L Plantation.

¶10. On June 3, 2004, TEI purchased real property from Ernest Thomas. On June 12, 2007, TEI also purchased real property from James and Mary Duke. Ellis had been renting the Dukes' property since 1986. Ellis testified that no marital assets were used to purchase the Dukes' property. Instead, he stated that TEI purchased the Dukes' property by obtaining a loan from River Hills Bank and that rent sums from TEI's hunting and farming leases were used to pay the bank loan.

¶11. Lisa and Ellis stipulated to the chancellor that TEI owned three pieces of equipment valued at $20,700. The chancellor also found that TEI owned four separate tracts of land with appraised values totaling $3,101,000. The debt on the real property amounted to $602,095.53, and the equity in the real property amounted to $2,498,904.47. The chancellor therefore found TEI's real property had a total value of $3,121,700, with the debt amounting to $602,095.53 and the equity amounting to $2,519,604.47.

¶12. The chancellor found that the major source of contention between the parties was whether TEI and its accumulated assets and liabilities constituted marital assets. Although Lisa contended TEI was a marital asset, Ellis testified that the corporation was a gift from his father that failed to constitute a marital asset. Ellis therefore asserted that Lisa was not entitled to any equitable distribution of TEI or its assets. The chancellor concluded that Senior did, in fact, give the TEI stock to Ellis as a gift, that Lisa did not actively participate in TEI or its business decisions, and that Lisa did not contribute to or invest in TEI's operations. In addition, the chancellor determined that TEI's real property and equipment were purchased solely with TEI's funds and/or loans. As a result, the chancellor also found that TEI's assets never constituted marital property. Further, the chancellor concluded that TEI's nonmarital assets were never converted into or commingled with marital assets.

¶13. After classifying the parties' assets as either marital or nonmarital, the chancellor considered the Ferguson¹ factors and equitably divided the marital estate. The chancellor found the total value of the marital estate to be $845,237.34. The chancellor awarded Lisa assets totaling $478,497.78 (57% of the marital estate) and made her responsible for $160,444.97 of the marital debt. This amounted to an equity award of $318,052.81. The chancellor awarded Ellis assets totaling $366,739.56 (43% of the marital estate).

The chancellor next analyzed the Armstrong² factors and denied Lisa's request for alimony. The chancellor also denied the parties' requests for attorney's fees and court costs. Aggrieved, Lisa appeals the chancellor's classification of TEI and its assets as nonmarital property and her distribution of the marital estate based on this classification. Ellis cross-appeals and asserts the chancellor erroneously denied both his motion to dismiss Lisa's equitable-distribution complaint and his motion to reconsider the denial.

DISCUSSION

I. Res Judicata

¶14. We first address Ellis's argument on cross-appeal that he voluntarily submitted to North Carolina's jurisdiction during the divorce proceeding and that North Carolina's statutory law therefore required Lisa to either raise the issue of equitable distribution or else abandon the claim altogether. Because Lisa failed to assert the claim in the divorce action, Ellis contends she is barred from raising the issue in a subsequent proceeding. Ellis therefore argues the chancellor erred by not finding that res judicata barred Lisa's Mississippi action for equitable distribution. On the basis of this argument, Ellis asks this Court to reverse and render the chancellor's judgment. Alternatively, Ellis asks that we affirm the chancellor's determination as to equitable distribution. We review questions of law, such as issues of jurisdiction, de novo. See ...