Hanify v. Hanify

• Decision Date: 09 August 1988
• Citation: 526 N.E.2d 1056,403 Mass. 184
• Parties: , 57 USLW 2163 Edward B. HANIFY v. Martha M. HANIFY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1056

526 N.E.2d 1056

403 Mass. 184, 57 USLW 2163

Edward B. HANIFY v. Martha M. HANIFY.

Supreme Judicial Court of Massachusetts Berkshire.

Argued Feb. 4, 1988.

Decided Aug. 9, 1988.

Daniel A. Ford, Pittsfield, for Edward B. Hanify.

Andrew T. Campoli, Pittsfield, for Martha M. Hanify.

Before HENNESSEY, C.J., and WILKINS, LIACOS, ABRAMS, NOLAN and LYNCH, JJ.

ABRAMS, Justice.

Edward B. Hanify (husband) has appealed from several aspects of a judgment of divorce. He claims error in (1) the award to Martha M. Hanify (wife) of an interest in the proceeds of two pending lawsuits which he had instituted; (2) the distribution of the couple's automobile; and (3) the child support order. ¹ We transferred the case to this court on our own motion.

The judge found as follows. The parties were married on May 31, 1980, having lived together for two years. Two children were born of the marriage, both of whom live with the wife. The parties separated in July, 1984. Judgment was granted on the wife's divorce on April 7, 1986.

The husband had an uneven employment history during the course of the marriage. In the fall of 1979, the husband began working as chief executive officer at Martha's Vineyard Hospital. In September, 1980, his employment contract was not renewed. The husband instituted two lawsuits, which are still pending, against the hospital and several individuals associated with it. The complaints allege, inter alia, breach of an employment contract, malicious interference with the contract, and defamation. The judge's inclusion of these complaints in the division of the marital estate forms the major basis for the present appeal.

Until September, 1980, the couple was financially comfortable and enjoyed a fairly high standard of living. The loss of the husband's job severely changed the financial picture. After that event, the husband held a variety of positions, interspersed with periods of unemployment. None of his subsequent jobs provided financial remuneration equal to that of the hospital employment; the parties now have a lower middle income status. Currently, the husband is a major stockholder and vice president of Berkshire Resort Properties, Inc., which owns a motel, of which the husband is the manager. The husband earns $15,600 annually, with no other source of income.

The wife worked during periods of the husband's unemployment and also supported the family as a homemaker. She currently earns $7,500 annually as a part-time licensed practical nurse.

1. Interest in pending lawsuits. As part of the division of property under G.L. c. 208, § 34, ² the judge assigned to the wife "from the net settlement or judgment of the 'Martha's Vineyard Lawsuit(s)' which were brought by the Husband and are now pending, ... one-half thereof, or the sum of $70,000, whichever amount is lesser, within ten days after receipt of the same by the Husband." ³ The husband claims error in this award on the ground, inter alia, that the pending law suits do not constitute part of the marital estate under G.L. c. 208, § 34. We disagree.

Massachusetts law vests in a judge broad powers of discretion regarding the division of marital estates. Under § 34, a judge "may assign to one party in a divorce proceeding all or part of the separate nonmarital property of the other in addition to or in lieu of alimony." Rice v. Rice, 372 Mass. 398, 401, 361 N.E.2d 1305 (1977). By definition, a party's estate "includes all property to which he holds title, however acquired." Id. at 400, 361 N.E.2d 1305.

An unliquidated claim for money damages constitutes a chose in action. "[C]hoses in action are property ... and fall within the divorce court's broad power to divide marital property.... '[A]ll personal property, tangible and intangible, in which a spouse acquires an interest is includable [as property to be divided by the court]. Choses in action, rights and other interests, the benefits of which may be receivable now and in the future are classifiable as intangible personal property.' " (Citations omitted.) Moulton v. Moulton, 485 A.2d 976, 978 (Me.1984), quoting Kruger v. Kruger, 73 N.J. 464, 468, 375 A.2d 659 (1977). Thus, many jurisdictions hold that pending lawsuits constitute marital property subject to division on divorce. Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988). In re Marriage of Dettore, 86 Ill.App.3d 540, 42 Ill.Dec. 51, 408 N.E.2d 429 (1980). Moulton v. Moulton, supra. Heilman v. Heilman, 95 Mich. App. 728, 731, 291 N.W.2d 183 (1980) ("a spouse's chose in action for personal injuries and the other spouse's per quod claim constitute property subject to such distribution"), quoting DiTolvo v. DiTolvo, 131 N.J. Super. 72, 79, 328 A.2d 625 (1974). Richardson v. Richardson, 139 Wis.2d 778, 407 N.W.2d 231 (1987). ⁴ We agree with this view.

The husband's reliance on precedents regarding expectancies is misplaced. Expectancies, unlike choses in action, embody no enforceable rights accruing during marriage. See Drapek v. Drapek, 399 Mass. 240, 244, 503 N.E.2d 946 (1987) (future earning potential created by a professional degree); Yannas v. Frondistou-Yannas, 395 Mass. 704, 714, 481 N.E.2d 1153 (1985) (future earning potential created by a patent); Davidson v. Davidson, 19 Mass.App.Ct. 364, 374, 474 N.E.2d 1137 (1985) (anticipated inheritance under a will where testator still living and could change terms of will).

A pending legal claim is distinguishable from an expectancy. The husband in this case has an enforceable, ripened, and pending claim for money damages. The damages include claims for income and assets lost during the marriage. The loss affected both spouses. Recovery of this loss should be considered an asset under § 34, because such recovery replaces monies that would have benefited both spouses had the alleged legal wrong not occurred. The fact that the pending lawsuits are of uncertain value does not require their exclusion from the marital estate. In Dewan v. Dewan, 399 Mass. 754, 755-757, 506 N.E.2d 879 (1987), we recognized that uncertain future benefits from a spouse's pension plan may be divided as marital property on an "if and when received" basis. Although a present division of all assets ordinarily is preferable, see id. at 757, 506 N.E.2d 879, where present valuation of a pension or chose in action is uncertain or impractical, the better practice is to order that any future recovery or payment be divided, if and when received, according to a formula fixed in the property assignment. See, e.g., Davidson v. Davidson, supra 19 Mass.App.Ct. at 372- 373 n.11, 474 N.E.2d 1137, and authorities cited; Moulton v. Moulton, supra (chose in action); In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976) (unvested pension); 2 Valuation and Distribution of Marital Property §§ 23.02[c], 27.01[c] n.44 (J.P. McCahey ed. 1987); Comment, Pensions as Marital Property: Valuation, Allocation and Related Mysteries, 16 Creighton L. Rev. 743, 765-767 (1983); Note, Pension Rights as Marital Property: A Flexible Approach, 48 Mo.L.Rev. 245, 253-255 (1983). That is precisely what the Probate Court judge did. ⁵

Where valuation is uncertain an "if and when received" order division of a pending chose in action achieves a final and equitable property division under § 34. The judge enters a final order dividing all the present assets and directs that the future recovery, if and when received, be divided according to a fixed formula. Such an order does not require the judge to retain jurisdiction over the settlement or leave it "open" pending resolution of the lawsuits. Nor does it prolong an unwanted relationship between the divorced spouses. The nonlitigating spouse need only keep the forum court and the litigating spouse's attorney advised of a current address. ⁶ Judicial supervision of alimony and support payments creates far more onerous burdens on the Probate Court and the parties than does an order to divide future pension or damage payments.

With respect to fairness, the argument in favor of an "if and when received" division of an unliquidated chose in action is even stronger. Because the judge does not have to assign a present value to the pending lawsuits, there is no danger, as the dissent suggests, "of conducting, in effect, a trial on the merits of the pending lawsuits." Post at 1062. On the contrary, an "if and when received" division "gives effect to the basic fairness of granting the wife one half of what [should have been] earned during the marriage, without burdening the husband in case he never receives [a recovery on his chose in action]." Moulton v. Moulton, supra at 979. This method of division is inherently equitable; it allows the parties to share equally the risk that the litigating spouse may lose the case, or recover an amount significantly different from anticipated. Id. See In re Marriage of Brown, supra, 15 Cal.3d at 848, 126 Cal.Rptr. 633, 544 P.2d 561.

A majority of jurisdictions that have considered the issue of legal damages recovered during marriage hold that such recoveries, at least to the extent of recovery for income lost and expenses added during marriage, constitute marital property. ⁷ The fact that a lawsuit is still pending at the time of divorce does not alter this result. A contrary decision would merely "place the claimant in the position of manipulating the claim so as to 'liquidate' it after divorce and thus have the power to determine whether it is included in marital property." Bunt v. Bunt, supra, 744 S.W.2d at 721. In our view, "if the claim for a compensation award accrues during the marriage, the award is marital property regardless of when received." In re Marriage of Dettore, supra, 86 Ill.App.3d at 542, 42 Ill.Dec. 51, 408 N.E.2d 429. We therefore affirm the judgment awarding the wife an interest in the pending lawsuit.

2. Assignment of automobile. The husband challenges the assignment of the couple's automobile to him in return for...