Harper v. Harper

• Decision Date: 21 November 2016
• Docket Number: Docket No.: BCD-FM-14-02
• Parties: TIMOTHY W. HARPER, Plaintiff v. SHERYL E. HARPER, Defendant
• Court: Maine Superior Court

TIMOTHY W. HARPER, Plaintiff v. SHERYL E. HARPER, Defendant

Docket No.: BCD-FM-14-02

Superior Court of Maine

November 21, 2016

STATE OF MAINE

Cumberland, ss.

BUSINESS AND CONSUMER COURT

Location: Portland

FINAL DIVORCE JUDGMENT

This Final Divorce Judgment is issued to address certain matters raised in Plaintiff's Motion for Reconsideration and to Amend Divorce Judgment Pursuant to M.R. Civ. P. 59(e); the Addendum thereto; Defendant's Objection, and Plaintiff's Reply to Defendant's Objection.Oral argument on the Motion was held November 10, 2016.Based on the entire record, the court finds and concludes as follows:

I.Background

PlaintiffTimothy W. Harper and DefendantSheryl E. Harper were married in New York in July 1978.Both are presently in their late fifties.They have four adult children.During the 36 years of the marriage,¹they started several businesses and accumulated substantial real property and other assets.With the exception of certain assets gifted to or inherited by one party or the other, all of the assets owned separately or jointly by the parties are marital assets.

The marital businesses are as follows:

• The McKinley Market, a convenience store and gas station in the Bass Harbor community in the Town of Tremont.In addition to the store, the parties' marital property includes adjacent parcels occupied by two storage buildings and two residential buildings.[McKinley Market and the adjacent properties are collectively sometimes referred to herein as "the Tremont properties"].The convenience store/gas station business is owned by Ruby Red, Inc., a corporation of which Defendant is the sole shareholder.The Defendant has been responsible for managing the operation of the convenience store and the rental of the Tremont properties.

• The Dictator, a scallop fishing boat based in Massachusetts.The boat is owned by Dictator, Inc., a corporation of which Plaintiff is the sole shareholder.The Dictator, Inc. assets include permits to fish and several operating accounts.The debt associated with the Dictator includes a loan from The First as well as a line of credit.Plaintiff has always been responsible for managing the operations of Dictator, Inc., although the fishing is handled by a hired captain and crew.

• North Eastern Seafood, Inc.(NES), an incorporated seafood sales business doing business under the names of Fish Unlimited and Southwest Lobster, operating out of a wharf and storage facility located at 126 Clark Point Road, Southwest Harbor ["the Wharf property"].Early in the parties' marriage, Defendant started the Fish Unlimited business by selling fish while Plaintiff worked on the parties' fishing boat.At some point before this case was brought, Plaintiff took over primary responsibility for managing the operations of NES, although he turned over responsibility to the Defendant toward the end of 2015.The assets associated with NES include inventory and equipment and several operating accounts.Debt associated with NES consists of two lines of credit, with Machias Savings Bank and The First.

• Commercial and residential property on Seawall Road, Southwest Harbor, Maine ["the Seawall property"].The property consists of a residence, two warehouses and a large lot of just under 10 acres.Plaintiff has been managing the Seawall property and collecting rents.

• Sheryl Rentals and Harper Rentals, two property rental businesses operated separately by Defendant and Plaintiff respectively.Each business has an operating account in the name of the party in question.

Although some of the businesses are owned by corporate entities of which one or both parties are the sole shareholders, those businesses as well as the parties' rental businesses were initiated and developed during the parties' marriage, and all of the corporate entities were formed during the parties' marriage.All of the businesses constitute marital property.

In addition to the businesses, the parties own several real properties and substantial tangible and intangible personal property, all of which are discussed below.

II.Procedural History

This case has been pending for almost four years.It was filed in the Ellsworth District Court in October 2012, and was transferred to the Augusta District Court in September 2013.The Augusta District Court held hearings in this matter on December 19, 2013 and March 4, 2014.On April 1, 2014, the District Court entered its First Interim Order, awarding Defendant exclusive possession of the parties' real estate located at 60 Beech Hill Road in Mount Desert, Maine, and awarding Plaintiff exclusive possession of the parties' real estate located at 68 Mountain View Road in Sullivan, Maine.

The First Interim Order further allocated between the parties responsibility for the operation of the five marital businesses.The Defendant was assigned responsibility for operating the McKinley Market business and property, as well as the Sheryl Rentals business.Plaintiff was assigned the responsibility to operate the NES seafood business; the Harper Rentals business, and the Dictator, Inc. fishing boat.

The First Interim Order also established responsibilities for payment of health insurance, automobile insurance, commercial and liability insurance, living expenses, monthly expenses, necessary repairs, and tax obligations.

In the Second Interim Order, issued on November 14, 2014, the District Court determined that the parties could each withdraw $30,000 from the NES Investment account for litigation expenses and that, if the parties agree, they could withdraw the remaining funds of approximately $8,416 from that account.The Second Interim Order further required a $25,169 tax refund be paid to Defendant and that Plaintiff pay Defendant an additional $19,357 to equalize the parties' 2013 income.

More than two years after it was filed, this action was transferred to the Business and Consumer Court in November 2014.

This court divided trial of the case into two phases.Phase I addressed the valuation of the parties' real estate, the valuation and allocation of intangible non-business personal property, the extent to which the parties' investments in accounts with H.M. Payson are marital property, and issues relating to the parties' insurance coverage.All other issues were reserved for Phase II.

Phase I of the trial was conducted, in part, on January 28 and 29 of 2015.While Phase II of the trial was scheduled to begin on February 23, it—and the conclusion of Phase I—was postponed following a conference with the parties and their counsel on that day.Essentially, the postponement was the result of a change in direction agreed on by the parties, involving the sale of the Ruby Red and Wharf properties and the appointment of a referee whose duties would include overseeing the marketing and sale of the properties.

Three days later, at the Plaintiff's request, the court held a hearing and granted a final divorce judgment notwithstanding the pendency of other claims, pursuant to M.R. Civ. P. 115(b), reserving jurisdiction to decide all remaining issues and reserving all claims and defenses of the parties.The following day, February 27, 2015, the court issued an Amended Interim Order that, among other things, appointed John Fidrych, CPA, MBA, as Referee and tasked him with the sale of the Ruby Red and Wharf properties and oversight of the parties' businesses, including Dictator, Inc.

Phase I of the trial resumed on April 28, 2015 after which the court entered an Order addressing issues relating to the H.M. Payson Account numbered #3108 and determined that only the 700 shares of Apple stock in the Account were Defendant's non-marital property.

Over the next months, the Referee arranged for the Ruby Red and Wharf properties to be listed for sale through brokers, and eventually an offer was obtained on the Wharf property.Although the offer was for a price in the range of what the parties deemed the Wharf property to be worth, the Defendant essentially changed her mind about agreeing to sell the Wharf.

On August 12, 2015, Defendant filed a motion to amend the February 27, 2015 Interim Order seeking, amongst other things, to remove Plaintiff from management of Dictator, Inc.—a scallop fishing operation— and to place herself in charge.Plaintiff filed a cross motion to amend, and the court scheduled a hearing on these motions for November 2, 2015.

On October 20, 2015, Plaintiff's counsel moved to withdraw.On November 3, 2015, the court granted the motion to withdraw and amended the February 27, 2015 Amended Interim Order to transition operational responsibility for NES from Plaintiff to Defendant by December 1, 2015.Based on the Defendant's change of position regarding sale of the Wharf property, the court also modified the Amended Interim Order to postpone the sale of that property and to reject an outstanding offer to purchase that property.On November 16, 2015, Plaintiff's current counsel entered her appearance.

On January 7, 2016, Defendant filed a motion to enforcethe court's November 3, 2015 Order alleging that Plaintiff was not cooperating in, and was actively impeding, the effective transition of control for NES to Defendant.This motion was consolidated for final hearing and remains pending.On March 7, 2016, Plaintiff filed a petition for distribution of funds to pay income taxes and his attorney fees.On March 28, 2016, this court ordered an advance of attorney fees, subject to reallocation.Plaintiff's petition for distribution of funds to pay income taxes was also consolidated for final hearing and remains pending.

On April 4 through 7 of 2016, Phase II of the trial was conducted.The court requested that the parties file their proposed findings of fact and conclusions of law by May 23, 2016, with reply memoranda marking up the other's proposed findings by June 6, 2016.As of June 6, 2016, the court took the case under advisement.

III.Governing Standards

In a divorce action, "the court shall set apart...