Geno v. Geno

• Decision Date: 30 March 2021
• Docket Number: NO. 2018-CA-01767-COA,2018-CA-01767-COA
• Parties: IN THE MATTER OF THE CONSERVATORSHIP OF MICHELLE A. GENO APPELLANT/CROSS-APPELLEE v. CRAIG M. GENO APPELLEE/CROSS-APPELLANT
• Court: Mississippi Court of Appeals

IN THE MATTER OF THE CONSERVATORSHIP

OF MICHELLE A. GENO APPELLANT/CROSS-APPELLEE v. CRAIG M. GENO APPELLEE/CROSS-APPELLANT

NO. 2018-CA-01767-COA

COURT OF APPEALS OF THE STATE OF MISSISSIPPI

March 30, 2021

DATE OF JUDGMENT: 09/14/2018

TRIAL JUDGE: HON. J. LARRY BUFFINGTON

COURT FROM WHICH APPEALED: MADISON COUNTY CHANCERY COURT

ATTORNEYS FOR APPELLANT: J. PEYTON RANDOLPH II ROBERT W. LONG RICK D. PATT

ATTORNEY FOR APPELLEE: DAVID BRIDGES

NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS

DISPOSITION: ON DIRECT APPEAL: AFFIRMED. ON CROSS-APPEAL: AFFIRMED IN PART; REVERSED AND REMANDED IN PART - 03/30/2021

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

EN BANC.

BARNES, C.J., FOR THE COURT:

¶1. Craig and Michelle Geno were married on March 1, 2008. During the marriage, the family's main source of income came from Craig's law practice. Michelle stayed at home to care for the couple's two minor children, but she also had some success as the author of a two-book series published on Amazon. Craig and Michelle separated on or about July 16, 2015, and two weeks later, Craig filed a complaint for divorce in the Madison County Chancery Court. On June 17, 2016, the parties consented to a divorce on the ground of irreconcilable differences. The chancery court entered an "Agreed Order" on August 23, 2016, which provided in relevant part that Craig was to pay for the transportation of Michelle's furniture from the current residence to her new residence and that he was to receive credit for those funds "from any final award to Michelle the [c]ourt may make." During the course of the proceedings, Michelle experienced mental health issues (bipolar disorder, ADHD, Cluster B personality disorders, hallucinations, and delusions), which required hospitalization; so the chancery court appointed Robert "Bobby" Long as conservator of Michelle's estate on January 23, 2017.

¶2. The trial on the remaining issues was conducted over eight days in 2017 and 2018. The court issued a bench ruling on September 4, 2018, and a written final judgment was entered on September 14, 2018. The chancery court awarded Craig sole legal and physical custody of the children. Michelle received supervised visitation but was not ordered to pay child support, as the court found she had no "present earnings capacity." The court determined that the "marital estate ha[d] a total value of $3.9 million, and that with the exception of Craig's law practice, the value of the marital estate should be divided equally between the parties." However, three assets were considered to be Craig's separate, non-marital property: (1) HG Realty LLC, a Mississippi limited liability company Craig formed in 2003; (2) a portion of a Vanguard account ($893,190.66, as well as passive earnings of $322,403); and (3) an ING/BankPlus account (valued at $298,808.03). Michelle was awarded permanent periodic alimony of $2,500 per month.

¶3. Michelle filed a motion to reconsider the judgment, particularly with regard to thecourt's determination of non-marital property and alimony. Craig filed a motion to alter or amend the judgment, "respectfully urg[ing]" the court to increase its finding of $200,000 for Michelle's wasteful dissipation as assets for the following reasons:

Michelle controlled, and then spent, without any explanation whatsoever, over $392,000.00 that she had taken from the parties' joint checking accounts during the course of the marriage, $64,000.00 for proceeds of book sales (while Craig paid the income taxes thereon); and over $56,000.00 in capital gains from stock sales of marital assets in 2015 and 2016. In addition, Michelle's premarital student loans of over $10,000.00 were paid, in full, during the course of the marriage, from Craig's earnings. The unexplained funds/waste value is over $512,000.00, yet Michelle was "awarded" less than one-half of funds she wasted and did not account for at all.

Craig also claimed "[t]he alimony award is over and above distributions that were balanced in the division of marital assets." The court entered an updated order on November 26, 2018, denying the relief requested by the parties. The court did clarify Michelle's equitable share of the marital assets and the method of transferring funds.

¶4. Michelle appeals, asserting that the chancery court erred (1) in its classification of certain assets as non-marital property; and (2) in its determination of the alimony award. Craig has filed a cross-appeal, also challenging the alimony award and additionally claiming that the chancery court (1) erred in its valuation of Craig's his law practice; and (2) failed properly to consider Michelle's dissipation of marital assets.

¶5. On direct appeal, we affirm, finding Michelle has not demonstrated that the court's findings on her assignments of error were not supported by substantial evidence. Regarding the issues raised by Craig on cross-appeal, we hold that the chancery court's findings concerning the valuation of Craig's law practice are supported by substantial evidence.

However, because the court failed to set forth specific findings as to the wasteful dissipation of assets by Michelle, we reverse and remand on this issue for further findings, which may require further consideration of the equitable distribution of assets and alimony. We also find the court erred by failing to include the amount Craig expended in transporting Michelle's furniture ($12,118.16) in the valuation and distribution of assets, in accordance with the chancery court's August 2016 order.

STANDARD OF REVIEW

¶6. "The scope of review in domestic cases is limited by the substantial evidence/manifest error rule. This Court will not disturb a chancellor's findings unless they were manifestly wrong or clearly erroneous, or the chancellor applied an erroneous legal standard." Lee v. Lee, 154 So. 3d 904, 906 (¶5) (Miss. Ct. App. 2014) (citations omitted).

DISCUSSION

Direct Appeal

I. Classification of Assets

¶7. Michelle maintains that the chancery court erred in ruling that HG Realty LLC, portions of the Vanguard investment account, and the ING/BankPlus retirement account were non-marital property. Our review of a chancellor's decision is limited. Fogarty v. Fogarty, 922 So. 2d 836, 839 (¶11) (Miss. Ct. App. 2006). The distribution of property in a divorce will be affirmed if "it is supported by substantial credible evidence." Bowen v. Bowen, 982 So. 2d 385, 394 (¶32) (Miss. 2008). Additionally, "[e]quitable distribution does not [always] mean equal distribution." Seymour v. Seymour, 960 So. 2d 513, 519 (¶15) (Miss. Ct. App.2006) (quoting Lauro v. Lauro, 924 So. 2d 584, 590 (¶23) (Miss. Ct. App. 2006)). The aim of equitable division is "a fair division of marital property based on the facts of each case." Id. (citing Ferguson v. Ferguson, 639 So. 2d 921, 929 (Miss. 1994)). Property division "is committed to the discretion and conscience of the [c]ourt, having in mind all of the equities and other relevant facts and circumstances." Chamblee v. Chamblee, 637 So. 2d 850, 864 (Miss. 1994) (quoting Brown v. Brown, 574 So. 2d 688, 691 (Miss. 1990)).

¶8. Prior to determining equitable distribution, the chancery court should first classify the couple's assets as either marital or non-marital. Boutwell v. Boutwell, 829 So. 2d 1216, 1221 (¶19) (Miss. 2002). The Mississippi Supreme Court addressed the classification of marital property in Hemsley v. Hemsley, 639 So. 2d 909, 914 (Miss. 1994), holding that "[a]ssets acquired or accumulated during the course of a marriage are subject to equitable division unless it can be shown by proof that such assets are attributable to one of the parties' separate estates prior to the marriage or outside the marriage." As this Court has succinctly stated, only marital property of the parties is subject to equitable division. Messer v. Messer, 850 So. 2d 161, 167 (¶24) (Miss. Ct. App. 2003) (citing Hemsley, 639 So. 2d at 914).

A. HG Realty LLC

¶9. In 2003, Craig created HG Realty LLC (HGR) as a means to own and lease the office building in which his law firm was housed. A lease was obtained by HGR, and the payments were covered through rent from the property's tenants, including Craig's law firm. In exchange for providing bookkeeping services to HGR, Craig's law firm received a discount of two months' rent each year. The chancery court determined that HGR was a separate,non-marital asset. Michelle contends that HGR is a marital asset and subject to equitable distribution, noting the rental payments from Craig's law firm and bookkeeping services provided to HGR.

¶10. In Spahn v. Spahn, 959 So. 2d 8, 12 (¶10) (Miss. Ct. App. 2006), this Court concluded that where a husband (1) owned a warehouse prior to the marriage, (2) maintained a separate account into which he deposited rent, and (3) "did not commingle the proceeds from the warehouse, nor use the warehouse for family purposes," the property was properly classified as non-marital property. Similar to Spahn, HGR was Craig's separate property before the marriage, the rent was not paid to HGR from marital funds, and the building was not used for family purposes. Craig never received income from HGR. In addition, Michelle was neither involved in the management of HGR nor provided funds for its upkeep. Accordingly, we find the chancellor was correct in classifying HGR as non-marital property.

B. Vanguard Account

¶11. Craig owned a Vanguard account containing $893,190.06 prior to the marriage. At the time of the parties' separation, the account had a balance of $3,352,855.33. The chancellor held that the original $893,190.06, as well as an additional $322,403 in passive income from interest and dividends earned after the marriage, were Craig's non-marital property. Michelle contends that the entire account should have been considered marital property because new funds were commingled with Craig's pre-existing funds, and funds from the account were used for the family to purchase marital property and pay household expenses.

¶12. The family-use...