Crider v. Crider

• Citation: 15 N.E.3d 1042
• Decision Date: 26 August 2014
• Docket Number: 53A04–1401–DR–26.,Nos. 53A05–1307–DR–358,s. 53A05–1307–DR–358
• Parties: Jeffrey CRIDER, Appellant, v. Christina CRIDER, Appellee.
• Court: Court of Appeals of Indiana

15 N.E.3d 1042

Jeffrey CRIDER, Appellant

v.Christina CRIDER, Appellee.

Nos. 53A05–1307–DR–358

53A04–1401–DR–26.

Court of Appeals of Indiana.

Aug. 26, 2014.

Bruce M. Pennamped, Nancy L. Cross, Cross Pennamped Woolsey & Glazier, P.C., Carmel, IN, Attorneys for Appellant.

Andrew C. Mallor, Kendra G. Gjerdingen, Mallor Grodner, LLP, Bloomington, IN, Attorneys for Appellee.

OPINION

BARNES

, Judge.

Case Summary

Jeff Crider appeals various parts of the trial court's decree dissolving his marriage to Christina Crider, as well as several post-judgment orders. Several business entities in which Jeff has an interest also have intervened in this case. We affirm in part, reverse in part, and remand.

Issues

The restated issues before us are:

I. whether the trial court properly ordered Jeff to pay any attorney fees Christina might incur in enforcing a monetary judgment;

II. whether the trial court properly ordered Jeff to make a cash equalization payment to Christina of $4,752,066 plus 8% statutory post-judgment interest;

III. whether the trial court properly valued a closely-held business in which Jeff held stock;

IV. whether the trial court properly valued two other businesses in which Jeff held membership interests;

V. whether the trial court properly excluded from the marital estate purported loans Jeff's father made to him;

VI. whether the trial court properly delayed, for ninety days from the date of the dissolution decree, implementation of a reduction in Jeff's child support obligation from his provisional support obligation, and then subsequently modified the decree to entirely reverse that reduction;

VII. whether the trial court properly granted Christina a security interest in Jeff's stock and membership interests in several closely-held family businesses and ordered that one-half of those stock and membership interests be transferred to Christina if Jeff failed to pay the cash equalization payment within 180 days of the dissolution decree;

VIII. whether the trial court granted a continuing lien against future property Jeff may acquire in order to satisfy the equalization judgment;

IX. whether the trial court properly ordered attachment of future loan proceeds Jeff may receive in order to satisfy the equalization judgment; and

X. whether the trial court properly entered garnishment, attachment, and child support income withholding orders against Jeff.

Facts

Jeff and Christina were married in 1992. They had two children during their marriage, one of whom is now emancipated. Christina first filed for divorce in 2006 and filed for legal separation in 2007, but both actions were dismissed. In May 2009, Christina filed another divorce petition.

Jeff is involved in a large number of business entities with his father, Robert, and his brother, Steve. The primary family business is Crider & Crider, Inc. (“CO”), which is engaged in road and other construction work primarily in the Bloomington area. Jeff, Robert, and Steve are the only shareholders of this closely-held S corporation. Jeff owns approximately 42.25% of the stock, Steve 42.25%, and Robert the remaining 15.5%. Two of the other family businesses are Logan Land Development, LLC, (“Logan”) and North Park, LLC. Both entities own property in a planned unit development (“PUD”) site in Bloomington called North Park. Jeff's interest in these entities is 33%. Other business entities at issue here, along with Jeff's interest therein, are: J.E. Crider & Son, LLC (30%), Crider Holding Company, LLC (33%), Crider Family Limited Partnership 1(24%), Lancor, LLC (50%), North Eastern Holdings, LLC (33%), and South Central Holdings Corp. (33%). Jeff also owned a fifty percent interest in Jefferson Centre, LLC, but it had no value at the time of dissolution. We will refer to the Crider businesses together as the “Crider Entities.” None of the Crider Entities were joined in the dissolution action; after a final dissolution decree was entered, they were granted permission to intervene in the case.

In 1993, Robert, Jeff, and Steve signed a stock transfer restriction agreement with respect to their holdings in CCI. The agreement prohibited any shareholder from encumbering any of their shares without prior written consent from the other shareholders, unless certain narrow exceptions were met. Additionally, the agreement purported to prohibit any transfer of shares to any other person unless first CCI, and then the other shareholders, were given the option to purchase the shares. It also required that any outside purchaser of CCI stock agree in writing to be bound by the agreement. It further stated, “No Shareholder shall sell, give away or otherwise dispose of any of his Shares (whether voluntarily or involuntarily, by operation of law or otherwise)” to any person in violation of the agreement, and that any such transfer of stock would be “void ab initio and of no force or effect whatsoever.” Intervenors's App. p. 160.

The LLCs also had restrictions on the transfer of membership interests written into their operating agreements.¹ The operating agreement for Lancor provided in part:

If any Membership Interest becomes subject to any Involuntary Transfer, the remaining Members shall have the option for a period of thirty (30) days to purchase such Membership Interest. The purchase price and terms of purchase shall be the purchase price and terms as if the Member died on the occurrence of the Involuntary Transfer. If the remaining Members do not purchase the Membership Interest of the Member subject to the Involuntary Transfer, the Members shall proceed with reasonable promptness to liquidate the business of the Company. The procedure as to liquidation and distribution of assets shall be governed by this Agreement with reference to termination in the event of a Member's death.

Id. at 172. The operating agreements for North Eastern Holdings and North Park contain identical provisions regarding involuntary transfer of membership interests. The operating agreement for Jefferson Centre contains identical language regarding the right of the other members to purchase a membership interest subject to an involuntary transfer, but is silent with respect to what should happen if the remaining members decline to exercise that right. Finally, there is different language in the operating agreements for J.E. Crider & Sons and Logan governing involuntary transfers. Those agreements provide that if one member's interest is transferred without the consent of the other members,

the transferee shall have no right to participate in the management of the business and affairs of the Company or to become a Member, and such transferee shall only be entitled to receive the share of profits or other compensation by way of income and the return of contributions to which the transferor of such Interest in the Company would otherwise be entitled.

Id. at 205.

During the first ten years of the marriage, Christina primarily was a “stay-at-home” parent taking care of the children, at Jeff's request. In 2002, she started an interior design business, but it was not profitable and she closed the business in 2012, when it had a remaining inventory of $52,000. Christina also had some part-time employment during the marriage.

Jeff's finances are complicated. There can be no doubt, however, that he earns considerably more per year than the $72,000 in salary that he received from CCI and that Jeff often characterizes as his only income. There was evidence presented that through 2007, CCI regularly made sizeable annual distributions to its shareholders, Jeff, Steve, and Robert. After that time, Jeff (and Steve and Robert) began loaning money to CCI instead, despite the fact that gross profits for the company were largely unchanged. For example, according to CCI's balance sheets, in 2007, it distributed $6,298,614 to the shareholders on gross profits of $8,131,994. In 2009, the year Christina filed for divorce, CCI paid no distributions to its shareholders, the shareholders instead loaned $3,784,829 to CCI, and its gross profits were $8,920,606. Steve later stated that companies who bonded CCI on its construction projects required the shareholder loans in order to provide greater equity in the company, but in fact the bonding companies indicated that this was not necessary and that CCI was a very financially sound company.

After 2007, Jeff was reluctant to provide personal financial statements to banks who loaned money to CCI based in part on Jeff's personal guarantee. The last time Jeff provided a personal financial statement was in 2007, before Christina filed for divorce, and it estimated his personal net worth at more than $11,000,000. Jeff's income tax returns are not helpful in determining his actual income. For example, his 2010 return reflects an adjusted gross income of $931,199 and a tax refund of $138,686. His 2011 tax return reflects an adjusted gross income of -$430,424, but still a tax refund of $128,594. An accountant for CCI indicated that the income figures on the tax returns are largely meaningless, because individual shareholders of an S corporation, like Jeff, must report on their returns income that passes to them from the corporation, even if the corporation does not actually make any distributions to the shareholders. The accountant also testified that CCI would pay “bonuses” to the shareholders to compensate them for any tax liability caused by the pass-through income, even if it did not make shareholder distributions.

Further uncertainty about what Jeff's income is comes from the June 2012 “Agreed Entry Modifying Child Support Obligation” upon emancipation of the couple's oldest child. That agreement listed Jeff's weekly income as $17,737, or $922,324 per year, with a resulting weekly support obligation of $1,257.13 for the one remaining child. The Criders' lifestyle also reflected a high level of income. The marital home sold for nearly $1.5 million during the pendency of the divorce, the couple owned a condominium in Hilton Head,...