In re marriage of Gill

• Docket Number: 2021AP1771
• Decision Date: 29 August 2023
• Parties: In re the marriage of: Lisa J. Gill, Petitioner-Respondent, v. James B. Gill, Respondent-Appellant.
• Court: Wisconsin Court of Appeals

1

In re the marriage of: Lisa J. Gill, Petitioner-Respondent,
v.
James B. Gill, Respondent-Appellant.

No. 2021AP1771

Court of Appeals of Wisconsin, District III

August 29, 2023

This opinion will not be published. See WIS. STAT. RULE 809.23(1)(b)5.

APPEAL from a judgment and an order of the circuit court for Outagamie County: No. 2017FA735, CARRIE A. SCHNEIDER, Judge.

Before Stark, P.J., Hruz and Gill, JJ.

Per curiam opinions may not be cited in any court of this state as precedent or authority, except for the limited purposes specified in Wis.Stat. Rule 809.23(3).

2

PER CURIAM. ^[1]

¶1 James Gill appeals a judgment of divorce and an order denying his motion to reconsider issues regarding the parties' property division.^[2] Gill argues that the circuit court erroneously exercised its discretion by assigning less than half of his business's tax liabilities to his ex-wife, Lisa Bahr (formerly known as Lisa Gill). He also argues that the court erroneously denied his motion to reopen the evidence after the divorce was granted to consider how the COVID-19 pandemic affected the value of his business. Finally, Gill argues that the court erroneously awarded Bahr $15,000 in attorney fees. We reject his arguments and affirm.

BACKGROUND

¶2 Gill and Bahr married in June 2011. At that time, Gill was fifty-eight years old and the sole owner of a hair salon business, Salon Aura, which had three locations and carried a significant amount of debt and negative equity. Bahr, on the other hand, was a forty-five-year-old school teacher. Throughout the parties' marriage, Salon Aura was profitable and increased in value. Bahr, however, did not participate in the management or operations of the business. Despite Salon Aura's success, the parties nonetheless "liv[ed] way outside of [their] means," as Gill conceded in his testimony.

¶3 As a sole proprietor, Gill reported all of Salon Aura's income as pass-through income on his tax returns. Gill's income largely consisted of "owner draws," which were direct payments from Salon Aura toward his personal

3

expenses. Instead of making quarterly tax payments to avoid penalties and interest, Gill paid his taxes at the end of each tax year. An accountant prepared the parties' taxes, which both parties signed. Eventually, the Wisconsin Department of Revenue audited the parties' joint income tax returns for the 2014-2016 tax years. As a result of that audit, certain claimed business deductions from the parties' taxable income were disallowed, such that Gill and Bahr incurred additional tax liabilities.

¶4 In October 2017, Bahr filed a petition for divorce. The parties' tax issues, however, did not end. One month after Bahr filed for divorce, the parties took out a second mortgage on their marital residence to pay their 2016 income taxes. Gill also later obtained a second mortgage on a cottage he brought into the marriage to pay his 2017 and 2018 income taxes. Bahr, on the other hand, filed individual tax returns beginning with the 2017 tax year. As the divorce proceedings progressed, the value of Salon Aura became a central issue, and each party hired an expert witness to complete a valuation of the business.^[3]

¶5 The circuit court held a three-day trial, at which the parties, their expert witnesses, and a certified public accountant who assisted with the parties' taxes testified. On January 10, 2020, the court granted the parties a divorce but withheld a decision on property division, allowing the parties to brief the issue. Before the parties submitted their briefs, the COVID-19 pandemic began, and Salon Aura closed for approximately two months pursuant to a government order.

4

Shortly thereafter, Gill filed a motion to reopen the evidence, seeking to show that the pandemic had negatively affected the value of Salon Aura. The court denied that motion. Several weeks later, Gill renewed his motion to reopen the evidence, and the court denied that motion as well.

¶6 In mid-May 2020, the parties submitted their written arguments on property division to the circuit court. Among other things, Bahr argued that Gill "should be [held] solely responsible for all taxes and loans [used] to pay taxes resulting from his business income." In support, Bahr emphasized her lack of involvement and decision making in Salon Aura. Bahr also argued that Gill should be required to pay a portion of her attorney fees because of the parties' income disparity and because Gill engaged in overtrial.

¶7 In late June 2021, the circuit court issued a written decision dividing the parties' property, assets and liabilities. Among other things, Gill received the marital residence, the cottage he brought into the marriage, his two personal vehicles, Salon Aura, and all of the debts and liabilities associated with those items. On the other hand, Bahr received, among other things, the residence that she purchased after filing for divorce, along with her personal vehicle and employer-based retirement account. In reaching its final property division, the court categorized a fair amount of property and equity as premarital property and awarded it to the respective party. Ultimately, based on the disparity in assets between Gill and Bahr, the court ordered that Gill make an equalization payment to Bahr. In determining that payment amount, the court considered the value of Salon Aura that it had found after considering the parties' respective expert valuations of the business.

5

¶8 The circuit court also held a hearing during which it elaborated on its decision and allowed the parties to address any potential errors. The court noted that-for purposes of calculating the equalization payment-Bahr would be held responsible for only one-third of the outstanding debt related to Salon Aura's taxes between 2014 and 2017, fifteen percent of the debt related to Salon Aura's 2018 taxes, and nothing beyond Salon Aura's 2018 taxes. The court acknowledged that Bahr received a benefit from Salon Aura's income, but it concluded that Bahr should not be equally responsible for the tax debts because she was not involved in Salon Aura's day-to-day operations. To effectuate the court's tax decision, the court divided two-thirds of the 2014-2017 tax debt between the parties, and it assigned the remaining one-third to Gill without credit for the debt in the property division. The court also ordered Gill to contribute $15,000 toward Bahr's attorney fees, noting that some of the extra work in the case-namely, numerous adjustments to provided balance sheets, accountings and tax liability numbers- was, "in [the c]ourt's opinion, ... completely in Mr. Gill's control and led to some additional expenses."

¶9 Following the hearing, the circuit court issued a final, amended decision. Pursuant to that decision, Gill was required to pay Bahr $356,180, which represented Gill's equalization payment, payment for Bahr's premarital equity in the marital residence, and $15,000 for attorney fees. Gill later filed a motion for reconsideration and a motion to stay equalization payments, and Bahr, in turn, filed a motion for additional contribution to her attorney fees. The court denied all of those motions.

6

¶10 Gill now appeals.^[4] Additional facts will be provided as necessary below.

DISCUSSION

¶11 Gill argues that the circuit court erred in dividing the parties' property, by denying his motion to reopen evidence, and by ordering him to pay attorney fees. We review each of these decisions for an erroneous exercise of discretion. See LeMere v. LeMere, 2003 WI 67, ¶13, 262 Wis.2d 426, 663 N.W.2d 789 (the division of property is a discretionary decision); Stivarius v. DiVall, 121 Wis.2d 145, 157, 358 N.W.2d 530 (1984) ("The power to reopen a case for additional testimony lies in the sound discretion of the [circuit] court."); Johnson v. Johnson, 199 Wis.2d 367, 377, 545 N.W.2d 239 (Ct. App. 1996) (an award of attorney fees is a discretionary decision).

¶12 "A circuit court's discretionary decision is upheld as long as the court 'examined the relevant facts, applied a proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach.'" LeMere, 262 Wis.2d 426, ¶13 (citation omitted). If a court fails to adequately set forth its reasoning in reaching a discretionary decision, we will

7

search the record for reasons to sustain that decision. Long v. Long, 196 Wis.2d 691, 698, 539 N.W.2d 462 (Ct. App. 1995).

I. Property division

¶13 Gill contends that the circuit court erroneously assigned Bahr less than half of Salon Aura's tax liabilities despite assigning Bahr half of Salon Aura's total value. Gill acknowledges that the court "ordered an equal property division, with the exception that it excluded the value of real property and retirement accounts that Gill and Bahr had prior to their short marriage, and its assignment to Bahr of less than half of the joint tax liabilities." Gill nonetheless asserts that the court "gave too much weight to the tax debt that was created by the income from Gill's business and not enough weight to the marital benefit derived from [that] income."^[5]

¶14 In rendering a divorce judgment, a circuit court must divide the parties' property in accordance with WIS. STAT. § 767.61. See McReath v. McReath, 2011 WI 66, ¶¶23-24, 335 Wis.2d 643, 800 N.W.2d 399. Limited types of property are excluded from property division, including property acquired

8

"[a]s a gift from a person other than the other party" and property acquired "[b]y reason of the death of another." Sec. 767.61(2). However, the court shall presume that all other property not described in § 767.61(2)(a) "is to be divided equally between the parties." Sec. 767.61(3). The court may deviate from the presumption of equal distribution upon considering the factors enumerated in § 767.61(3).

¶15 As an initial matter, due to the numerous assets...