Hough v. Hough, No. 96,862.

CourtSupreme Court of Oklahoma
Writing for the CourtLAVENDER, J.
PartiesCharles H. HOUGH, Plaintiff/Appellant, v. Ashley H. HOUGH, Defendant/Appellee.
Docket NumberNo. 96,862.
Decision Date08 June 2004

92 P.3d 695
2004 OK 45

Charles H. HOUGH, Plaintiff/Appellant,
v.
Ashley H. HOUGH, Defendant/Appellee

No. 96,862.

Supreme Court of Oklahoma.

June 8, 2004.


92 P.3d 697
LAVENDER, J

¶ 1 The issue in the present cause is whether the trial court abused its discretion in determining that its order requiring Husband to pay the fees and costs of the special master and the order awarding a judicial lien to special master to secure such payment, were intended to provide support for the wife and thus, non-dischargeable in bankruptcy. We hold that the trial court did not abuse its discretion in making such determinations in this case and the COCA erred in vacating the portion of the trial court's order denominating the special master's fees as support for the wife and the portion of the order providing the judicial lien is non-dischargeable.

I

FACTS AND PROCEDURAL HISTORY

¶ 2 Husband filed for divorce from Wife on February 12, 1997. This case involves a complicated marital estate, which included the parties' co-ownership of two businesses (A-C Air and A-C Rentals, Inc.1) and 44 rental properties, but Husband maintained exclusive control over the businesses, properties and income therefrom. Wife was primarily a homemaker and mother of two daughters during the 16-year marriage, while Husband operated the businesses.

¶ 3 Evidence reflects that throughout the course of this litigation, Husband was generally uncooperative in discovery and in compliance with the trial court's orders2, he intentionally misused and/or dissipated joint business funds3, and that he provided incomplete, false and/or misleading information to the court concerning his true income4 and/or

92 P.3d 698
the value of the two businesses in an apparent attempt to decrease his support obligation for his wife and children

¶ 4 Given Husband's misconduct, Wife filed a motion to appoint a special master "to oversee all matters relating to the marital estate of the parties ... to determine the value of the marital estate, to conduct discovery regarding the estate, to control the Husband's ability to further dissipate the estate, to determine the Husband's prior dissipation of the marital assets and all other such matters regarding the estate."5 Wife's motion specifically requested the need for a special master, who would be both an attorney and certified public accountant, given the "diverse nature of the marital estate" and noted such an appointment would spare the parties "considerable time and expense of hiring two experts for the same purpose."6 Wife proposed the appointment of attorney/C.P.A. Ken Klingenberg to serve as special master, with such fees and costs of the special master to be paid by Husband. Husband objected to the appointment of a special master "as being outside the scope of any Statutory authority and there being no case law for same."7

¶ 5 The trial court ultimately entered the following Order:

[A]ppointment of a special master will be of benefit to the Court in matters relating to discovery, valuation and preservation of the marital estate ... [and such special master] shall have control of all matters relating to discovery, valuation and preservation of the marital estate (including the two businesses); shall control Plaintiff's ability to expend the marital estate and to determine the Plaintiff's prior expenditures and/or depletion of the marital assets; and shall control all other matters regarding the marital estate. Said fees and costs shall be paid by the [Husband] from the marital estate."8

Husband thereafter filed his Motion to Discharge Special Master9 on March 12, 1999,

92 P.3d 699
which the trial court subsequently denied. Husband continued his quest for discharge of the special master with the filing of his Application to Assume Original Jurisdiction and Petition for Writ of Mandamus and Prohibition with this Court, which was unanimously denied on July 12, 1999.10

¶ 6 The parties' divorce proceedings ended in settlement on September 8, 2000, with the issue of attorney fees and costs expressly reserved in the Consent Decree of Divorce. Special master thereafter filed his Application for Attorneys Fees on September 15, 2000, seeking fees and costs in the amount of $43,404.98. Husband reiterated his objections to special master's Application for payment of fees and costs, arguing that "the initial referral to a special master was ultra vires in that there was no good cause for the appointment," the trial court's order granting the special master authority to conduct discovery was improper, vague and overly broad, and the fee was excessive. During the pendency of the trial court's consideration of the reserved issues of fees and costs including those of the special master, Husband filed his Chapter 13 Bankruptcy Petition in the U.S. Bankruptcy Court in March, 2001.11 Special master filed his Amended Application for Payment of Attorney's Fees with the trial court on August 27, 2001, seeking additional fees since the filing of the original Application for a total fees and costs of the special master of $48,703.40.

¶ 7 On September 4, 2001, the trial court granted special master's Application for Payment of Attorney's Fees and approved total payment of fees and costs in the amount of $48,703.40, and further granted special master a judicial lien in that amount over all property awarded to Husband from the marital estate, and determined such "judicial lien shall not be discharged by [Husband] in bankruptcy." Additionally, the trial court determined as follows:

[t]he initial order requiring the [Husband] to pay the fees and costs of the Special Master from the marital estate and the order awarding a judicial lien to the Special Master, were intended to provide support to the [Wife] ... by allowing her to use the money awarded to her for support instead of using the money for payment of the attorney's fees and costs of the Special Master.

Finally, the trial court concluded "[t]hat substantially all efforts expended by the Special Master in ensuring compliance with discovery order, valuation and preservation of the marital estate, were necessitated by the [Husband's] hindrance, delay and general `uncooperativeness' in this case; and that such an award as stated above is more than reasonable, considering the [Husband's] actions taken in this case."

¶ 8 Husband appealed, arguing the trial court erred in the following respects: (a.) the trial court improperly delegated judicial authority to the special master; (b.) the trial court's order was vague and overbroad in its appointment of special master to conduct "blanket discovery" in a case that does not present complex issues of accounting or valuation; (c.) the trial court erred in awarding special master fees in this case because there is no statutory basis for such award; (d.) the order surpasses the relief prayed for by improperly granting a judicial lien against Husband's property and finding that fees were intended for support of Wife and determining that the fees are not dischargeable in bankruptcy. COCA affirmed the order awarding special master fees and costs in the amount

92 P.3d 700
of $48,703.40, but vacated the portion of the order determining special master's fees as support for the Wife and further vacated the trial court's determination that the judicial lien was non-dischargeable in bankruptcy. Special master filed his Petition for Certiorari.12

II

THE TRIAL COURT DID NOT ABUSE ITS DISCRETION IN CHARACTERIZING SPECIAL MASTER'S FEE AWARD IN THE NATURE OF SPOUSAL SUPPORT AND DETERMINING THAT JUDICIAL LIEN GRANTED TO SECURE HUSBAND'S PAYMENT OF SUCH FEE NON-DISCHARGEABLE IN BANKRUPTCY

¶ 9 As a starting point, we note that an action for divorce, alimony and division of property such as this one is one of equitable cognizance and in reviewing a case of equitable cognizance, the judgment of the trial court will not be disturbed unless the trial court abused its discretion or unless the court's finding was clearly against the weight of the evidence. Merritt v. Merritt, 2003 OK 68, ¶ 7, 73 P.3d 878, 882, cert. denied, ___ U.S. ____, 124 S.Ct. 820, 157 L.Ed.2d 697 (2003); Creech v. Creech, 1956 OK 10, 292 P.2d 376, 378; Tschauner v. Tschauner, 1952 OK 230, 245 P.2d 448. In this case, the COCA concluded that the trial court abused its discretion in its determination that its Order requiring Husband's payment of special master's fee was "intended to provide support to [Wife]" and ordering that the judicial lien (granted to secure Husband's payment of special master's fees) shall not be discharged in Husband's bankruptcy. The COCA based its determination on the unsupported basis that "special master's fees and costs are not support for Wife. The fees were not paid to Wife for her use." The COCA further reasoned that 12 O.S. § 61913 does not provide that a referee's compensation be intended to support a party in a divorce action." Finally, the COCA concluded "[t]he trial court has no judicial authority to declare the judicial lien or special master's fees non-dischargeable in bankruptcy. This determination is for the bankruptcy court."

¶ 10 We disagree with the COCA's conclusions. Consistent with and pursuant to the exceptions to discharge section of the U.S. Bankruptcy Code, 11 U.S.C. § 523(a)(5) (2000)14, Oklahoma courts recognize that an award in the nature of alimony, maintenance

92 P.3d 701
or support of the spouse or child may not be discharged in bankruptcy. Battles v. Battles, 1952 OK 2, 239 P.2d 794; Owens v. Owens, 1995 OK CIV APP 17, 897 P.2d 1145 (Released for publication by Order of the Supreme Court of Oklahoma). Oklahoma state courts have exercised their judicial authority in divorce actions to determine whether the nature of an obligation arising out of a divorce is intended for support and maintenance of the spouse and therefore, may not be discharged in bankruptcy as opposed to dischargeable property division. See, e.g., Battles, 239 P.2d at...

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