Lewis v. Pagel

• Decision Date: 13 August 2015
• Docket Number: 2008–CT–01362–SCT.,Nos. 2013–CA–01631–SCT,s. 2013–CA–01631–SCT
• Citation: 172 So.3d 162
• Parties: Drake L. LEWIS v. Tonia D. (Lewis) PAGEL.
• Court: Mississippi Supreme Court

172 So.3d 162

Drake L. LEWIS

v.Tonia D. (Lewis) PAGEL.

Nos. 2013–CA–01631–SCT

2008–CT–01362–SCT.

Supreme Court of Mississippi.

Aug. 13, 2015.

Thomas Wright Teel, Biloxi, attorney for appellant.

Dean Holleman, attorney for appellee.

Before WALLER, C.J., CHANDLER and KING, JJ.

Opinion

CHANDLER, Justice, for the Court:

¶ 1. Drake and Tonia Lewis¹ were divorced by order of the Harrison County Chancery Court on January 11, 2008. Drake filed an appeal challenging the chancellor's property division, and the appeal was assigned to the Court of Appeals. The Court of Appeals affirmed in part and reversed in part and remanded. Lewis v. Lewis, 54 So.3d 233, 244 (Miss.Ct.App.2009). This Court on certiorari modified the Court of Appeals' order on remand. Lewis v. Lewis, 54 So.3d 216, 219 (Miss.2011). During the appellate process, both parties filed motions for modification of child support and for contempt. After the remand, the chancellor held a hearing and entered an order addressing the property division in accordance with the instructions from this Court and the Court of Appeals. The chancellor entered a separate order modifying child support, finding Drake in contempt and awarding Tonia attorney's fees. Drake has appealed all issues.

¶ 2. We affirm in part and reverse in part and remand. We reverse the chancellor's denial of Drake's motion to modify child support and remand for the chancellor to reconsider this issue consistent with this opinion. In all other respects, we affirm the judgments of the chancery court.

FACTS

¶ 3. Drake and Tonia married in Columbia, Missouri, on March 2, 1991. Three children were born of the marriage; all were under age eighteen at the time of the trial. In 1996, the Lewises moved to Gautier, Mississippi, and entered into real estate ventures with Drake's father, a property developer based in Louisiana. Drake's father established a trust in Drake's name that included real property. Later, the trust distributed Drake's trust property to Drake and it was titled in his name. In 2001, Drake and Tonia formed Legacy Holdings, Inc. (“Legacy”), a general contracting business constructing residential homes. Legacy was a closely-held corporation, and Tonia and Drake each owned fifty percent.Tonia testified that Drake handled the building projects, while she worked with the home buyers to select materials for use in the homes. Tonia also performed bookkeeping until Legacy hired a secretary. Legacy built homes on trust property, on property Drake received from the trust, and on property that Drake and Tonia purchased together.

¶ 4. During the marriage, Drake had two affairs, prompting Tonia to file for a divorce on the ground of adultery in 2006. The parties separated in June 2006. At the divorce trial, the issues of the valuation of Legacy and the classification and valuation of the various real estate holdings were hotly contested. The chancellor granted Tonia a divorce on the ground of adultery. The chancellor awarded Tonia assets totaling $865,733, and awarded Drake assets totaling $1,807,882, including Legacy, which the chancellor valued at $1,148,270. Drake's allotment of assets also included the repayment of a loan that the parties had made to Legacy, totaling $156,555. The chancellor awarded Tonia rehabilitative alimony of $2,000 per month for twelve months. The chancellor gave the parties joint legal custody of the children, with Tonia to have physical custody and Drake to have visitation. Finding that Drake had a net monthly income of $7,600, the chancellor ordered him to pay child support in the amount of $1,606 per month, equaling 22% of his net income. The chancellor also ordered Drake to bear all college expenses for the children.

¶ 5. Drake appealed, arguing that the equitable distribution was erroneous because the chancellor had made errors in classifying and valuing certain assets. This Court assigned Drake's appeal to the Court of Appeals, which affirmed in part and reversed in part and remanded. Lewis v. Lewis, 54 So.3d 233, 244 (Miss.Ct.App.2009). At the trial, Drake had sought to show that Legacy had no value. The chancellor rejected Drake's contention, finding from three documents submitted by Tonia that Legacy was worth 1,148,270. The documents submitted by Tonia included her financial declaration, a financial statement she had printed shortly after the separation, and a balance sheet for Legacy. Lewis, 54 So.3d at 237–38. Because Tonia had admitted at trial that the valuations of Legacy in all three documents were inaccurate, the Court of Appeals found that the chancellor had manifestly erred by relying on them to value Legacy. Id. at 239. The Court of Appeals remanded for the chancellor to

value Legacy using: (1) any real property owned by Legacy; (2) any other property owned by Legacy, such as vehicles or tools; (3) goodwill equity, if any, attributable to Legacy; and (4) any improvements that Legacy owns that are made to real property owned by parties other than Legacy. In making these determinations, the chancery court should consider “that price at which [the business] would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.” Singley v. Singley, 846 So.2d 1004, 1011 (¶ 18) (Miss.2002).

Id. at 240. The Court of Appeals found that the chancellor had made three other errors in the equitable distribution, including: (1) classifying the Swamp Road property as marital; (2) classifying the St. Martin property as marital; and (3) including Lot 13 of Hickory Hills, which no longer was owned by the parties. Id. at 243–44. In all other respects, the Court of Appeals rejected Drake's arguments and affirmed the chancellor's equitable distribution. Id. The Court of Appeals stated:

On remand, the chancellor must revalue Legacy using all relevant data, rather than relying on Tonia's admittedly inaccurate exhibits. The chancellor must also consider whether the Swamp Road acreage is marital property in light of Tonia's statements regarding the property, and whether the St. Martin property is marital property in light of the 1031 exchange. After considering all of these things, the chancellor must address the proper value of the marital estate and then make an equitable distribution of the marital estate, taking into account the new value of Legacy and any other property which has undergone a change in marital status. In so doing, the chancellor must not consider Lot 13 of Hickory Hills, which both parties agreed is no longer owned by either party.

Id.

¶ 6. Tonia filed a petition for certiorari, arguing that the Court of Appeals had erred in its remand order by requiring the chancellor to include goodwill in the valuation of Legacy. Lewis v. Lewis, 54 So.3d 216, 217 (Miss.2011). Based on our precedent, we agreed, holding that “[g]oodwill is simply not property; thus it cannot be deemed a divisible marital asset in a divorce action.” Id. at 218 (quoting Singley, 846 So.2d at 1011 ). This Court remanded for the chancellor to “cause the marital assets to be reevaluated consistent with the instructions of this opinion and those of the Court of Appeals, with the exception of considering goodwill equity.”

Id. at 219. Due to the complexity of the issues, we also encouraged the appointment of a special master to assist with the valuation of Legacy. Id. at 218.

¶ 7. During the appellate process, on October 8, 2008, Drake filed a motion for modification as to child support and custody, and an amended motion on June 3, 2009. Drake complained that, a few months after the divorce, Tonia had moved to Idaho with her new husband and the two youngest children, Madison and Caullin. Drake also asserted that Tonia had sent the oldest child, Jordan, to live with Tonia's sister in Apopka, Florida. Drake requested that Tonia be held in contempt because she had moved out-of-state and had allowed Jordan to move without his agreement. Drake requested custody, or alternatively, extension of his visitation and an order for Tonia to pay for transportation costs. Drake also requested termination of rehabilitative alimony due to Tonia's remarriage two months after the divorce and modification of college costs to provide that both parents share college expenses equally. He also requested modification of child support due to his decreased income.

¶ 8. On February 9, 2010, Tonia filed a countermotion for contempt and modification. She argued that Drake should be held in contempt because he was in arrears for nonpayment of child support in the amount of $5,414.26. Tonia requested her attorney's fees incurred in the filing of the motion for contempt. She also asserted that Drake was in arrears for nonpayment of certain medical expenses as ordered by the court and for nonpayment of some of Jordan's college expenses. Tonia argued that Drake's child support should be increased due to the increased needs of the children. She also claimed that Drake had caused to be issued a K–1 to Tonia for 2008 showing tax liabilities for Legacy, and that Drake should be held responsible for all tax liabilities arising out of Legacy.

A. Equitable Distribution and Alimony

¶ 9. The chancellor held a hearing on the issues raised by the remand and the motions for modification and contempt. No special master was appointed to assist the chancellor in valuing Legacy. Tonia put on no evidence concerning Legacy's value. Drake testified that he had closed Legacy in August 2008 and transferred some of its interests to a sole proprietorship called Legacy Builders. Drake testified that Legacy had a negative value. He presented the testimony of certified public accountant Doris Triplett, who testified that she had closed out Legacy's 2008 taxes. Triplett testified that she never had performed an audit of Legacy and never had determined what it owned. But Triplett testified that Legacy had assets on its books...