Johnson v. Johnson

• Decision Date: 16 December 2003
• Docket Number: No. 2002-CA-01552-COA.,2002-CA-01552-COA.
• Citation: 877 So.2d 485
• Parties: Paula L. JOHNSON, Appellant, v. Richard E. JOHNSON, Appellee.
• Court: Mississippi Court of Appeals

877 So.2d 485

Paula L. JOHNSON, Appellant, v. Richard E. JOHNSON, Appellee.

No. 2002-CA-01552-COA.

Court of Appeals of Mississippi.

December 16, 2003.

Rehearing Denied April 6, 2004.

Certiorari Denied July 9, 2004.

William B. Jacob, Joseph A. Kieronski, Daniel P. Self, Meridian, attorneys for appellant.

Thomas T. Buchanan, attorney for appellee.

EN BANC.

GRIFFIS, J., for the court.

¶ 1. Paula L. Johnson appeals a chancellor's division of marital assets, award of alimony and attorney's fees, pursuant to a consent for divorce under Mississippi Code Annotated Section 93-5-2. We reverse and remand for an equitable division of the parties' marital property and/or for a proper and sufficient award of lump sum and/or periodic alimony.

I. Statement of Facts and Procedural History

¶ 2. Paula and Richard E. Johnson were married on November 25, 1988, and they separated in July of 2000. Two children were born to the parties.

¶ 3. During their marriage, Richard conducted business through three closely held corporations: Southeastern Lumber, Inc., Southeastern Kilns, Inc. and Richard E. Johnson, Inc. Richard was the majority shareholder of each of these corporations. Richard E. Johnson, Inc. was formed before the marriage and the other two were formed after the parties were married. Occasionally, Paula worked at and assisted Richard in these businesses. She also held several other jobs. Paula's primary role was that of a homemaker and stay-at-home mom.

¶ 4. Paula filed for divorce in August of 2000, alleging adultery, habitual cruel and inhuman treatment and irreconcilable differences.

¶ 5. On March 9, 2001, the chancellor entered an order granting temporary relief. The chancellor awarded Paula custody of the children and, among other relief, ordered Richard to pay Paula temporary child support of $1,500 per month and temporary alimony of $1,500 per month.

¶ 6. On May 15, 2002, the parties agreed to an irreconcilable differences divorce and executed a consent for divorce. On June 25, 2002, the parties executed a supplemental consent for divorce. The consent for divorce and the supplemental consent for divorce itemized the stipulated and contested issues. The chancellor was presented with sixteen contested issues. Three of the contested issues are relevant to this appeal. They are:

1. Alimony: Whether or not Richard E. Johnson is to pay unto Paula Johnson alimony, and if so, whether it should be lump sum, periodic and/or rehabilitative.

14. Equitable Division of Businesses: Determine the equitable division of all businesses of the parties and establish the procedure for such equitable division to occur.

16. Attorney's Fees: Whether or not Richard E. Johnson should pay unto Paula L. Johnson reasonable attorney's fees and costs of this action and if so, in what amount and how should same be paid.

¶ 7. On August 22, 2002, the chancellor executed a memorandum opinion and judgment of divorce. The chancellor concluded that none of the three corporations were marital assets and, therefore, were not subject to equitable division. The chancellor awarded Paula $750 per month in permanent periodic alimony and denied her request for lump sum alimony. The order acknowledged the supplemental consent for divorce wherein the parties agreed that Paula was entitled to $250,000 from Richard for her interest in the marital home. The chancellor found that Paula had the ability to pay her attorney's fees and denied her request for attorney's fees and costs.

¶ 8. Paula now appeals and cites the following assignments of error:

A. The court erred by going outside the consent for divorce in changing the character of property from marital property to non-marital property contrary to the agreement of the parties and the proof presented at trial.

B. The court erred in awarding an inadequate amount of periodic alimony considering the earning capacity of the parties.

C. The court erred in failing to award lump sum alimony, or in the alternative, failed to equitably divide the assets of the parties.

D. The court erred by failing to award Paula Johnson an attorney's fee and thus forcing her to dissipate the funds awarded to her in order to pay her attorney.

Finding the chancellor in error on issues A, B and C, we reverse and remand for further proceedings consistent herewith.

II. Standard of Review

¶ 9. The standard of review that appellate courts must follow in domestic matters is well settled:

This Court will not disturb the findings of a chancellor unless the chancellor was manifestly wrong, clearly erroneous or an erroneous legal standard was applied. In other words, on appeal this Court is required to respect the findings of fact by the chancellor supported by credible evidence and not manifestly wrong. Sandlin v. Sandlin, 699 So.2d 1198, 1203 (Miss.1997) (citations omitted). Nonetheless, if manifest error is present or a legal standard is misapplied, this Court will not hesitate to reverse. Tilley v. Tilley, 610 So.2d 348, 351 (Miss.1992).

Flechas v. Flechas, 791 So.2d 295, 299(¶ 7) (Miss.Ct.App.2001).

III. Analysis

¶ 10. In the dissolution of a marriage, the division of property and the award of alimony are to be considered together. Burnham-Steptoe v. Steptoe, 755 So.2d 1225, 1233(¶ 25) (Miss.Ct.App.1999). The Mississippi Supreme Court has established several guidelines that must be followed for: (a) the equitable division of assets, Ferguson v. Ferguson, 639 So.2d 921, 928 (Miss.1994); (b) an award of periodic alimony, Armstrong v. Armstrong, 618 So.2d 1278, 1280 (Miss.1993); and (c) an award of lump sum alimony, Cheatham v. Cheatham, 537 So.2d 435, 438 (Miss.1988). These guidelines are relevant to this appeal and will be discussed below.

¶ 11. The supreme court has also established a procedure that must be followed for the chancellor to consider the appropriate remedies. The court has held that "[a]limony is not a completely independent financial issue in a domestic case, in which its consideration is hermetically sealed from other financial matters." Buckley v. Buckley, 815 So.2d 1260, 1262(¶ 10) (Miss.Ct.App.2002). Alimony together with equitable distribution of property work together to provide for the parties after divorce. Id. "Therefore, where one expands, the other must recede." Ferguson, 639 So.2d at 929. "If the marital assets, after equitable division and in light of the parties' non-marital assets, will adequately provide for both parties, then `no more need be done.'" Id. If an equitable division of marital property, considered with each party's non-marital assets, leaves a deficit for one party, then alimony should be considered. Id.; see King v. King, 760 So.2d 830, 835-36

(¶ 18) (Miss.Ct.App.2000) (summary of procedure to be followed).

¶ 12. Ferguson creates a roadmap for the chancellor to "conclude the parties' legal relationship, leaving each in a self-sufficient state." Ferguson, 639 So.2d at 929. The chancellor, therefore, must initially determine the claim for equitable division of marital property followed by the consideration of an award of lump sum and/or periodic alimony.

¶ 13. In Lauro v. Lauro, 847 So.2d 843, 850 (¶ 17) (Miss.2003), the Mississippi Supreme Court determined that since the case was remanded for further consideration of equitable division, the chancellor should be "instructed to revisit the awards of alimony and child support after [s]he has properly classified and divided the marital assets." Because we reverse this case and remand it to the chancellor for further proceedings, we include a complete discussion of the error we find on all issues. ¶ 14. On remand, the chancellor will have all tools of marital dissolution available: equitable division, lump sum alimony, periodic alimony and child support. The chancellor should not construe our opinion as to favor one over the other. Indeed, the chancellor may correct the error by granting an appropriate equitable division of assets, an appropriate award of lump sum alimony, or an appropriate award of periodic alimony, or any combination thereof.

A. Whether the trial court erred by changing the characterization of certain property from marital property to non-marital property contrary to the parties' agreement in the consent for divorce.

¶ 15. The first assignment of error requires us to review the chancellor's decision on the equitable division of marital property. Our review focuses on the chancellor's decision that Paula was not entitled to an equitable division of the stock Richard owned in three corporations: Southeastern Lumber, Inc., Southeastern Kilns, Inc., and Richard E. Johnson, Inc.

¶ 16. The chancellor's memorandum opinion held:

In considering equitable distribution of marital assets, the court must determine which assets are marital, pursuant to Hemsley v. Hemsley, 639 So.2d 909 (Miss.1994), and then apply the factors set out in Ferguson v. Ferguson, 639 So.2d [921] 928 (Miss.1994).

Richard E. Johnson, Inc. was a business started by Richard prior to the marriage. During the marriage, the value of the business has increased due to Richard's significant efforts. Paula did work as a secretary in the business from time to time, and helped out as Manager at the Church's Chicken as needed, but nothing that Paula did during the marriage ripened into any kind of ownership in Richard's business.

Paula enjoyed the fruits of Richard's efforts in the business, and marital assets were accumulated outside the business by virtue of the success of the business. Richard E. Johnson, Inc. is synonymous with Richard E. Johnson and the company's value (apart from its basic operating assets) is dependant upon Richard's involvement in the business. This business therefore is a non-marital asset not subject to equitable distribution. The same analysis is applicable to Richard's other businesses, Southeastern Lumber, Inc. and Southeastern Kilns, Inc., and these two businesses are likewise are non-marital assets, not subject to equitable

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